Elon Musk has combined his rocket company SpaceX with artificial intelligence startup xAI in what has become the largest merger in corporate history, valued at a staggering $1.25 trillion. The unprecedented deal, announced this week, positions the combined entity for what is expected to be one of the most anticipated initial public offerings in market history, with the IPO tentatively scheduled for mid-June to coincide with Musk's birthday and a planetary alignment.
The merger values SpaceX at $1 trillion and xAI at $250 billion according to documents reviewed by major financial news outlets. The deal is structured as a share exchange that will convert each share of xAI into 0.1433 shares of SpaceX stock. Documents show xAI shares priced at $75.46 and SpaceX shares at $526.59, with the combined company expected to price its IPO shares at approximately $527 each.
Musk justified the extraordinary combination by pointing to what he sees as the inevitable convergence of space technology and artificial intelligence. He stated that space-based AI is obviously the only way to scale, adding that a main reason for the merger was to better build orbital data centers. According to Musk, his estimate over the next two to three years is that the cheapest way to generate AI compute will be in space, predicting that capabilities unlocked by space-based data centers will fund self-growing bases on the Moon, an entire civilization on Mars, and ultimately expansion to the Universe.
The valuations reflect the extraordinary growth both companies have experienced in recent years. SpaceX conducted a secondary share sale last year at an $800 billion valuation, while xAI reached approximately $230 billion following a $20 billion funding round that concluded earlier this year. The combined valuation dwarfs competitors in both the space and AI sectors, with OpenAI last valued at $500 billion and Anthropic signing a term sheet last month for a round valuing it at $350 billion.
The merged entity inherits SpaceX's bitcoin holdings of approximately 8,300 BTC, worth around $650 million at current prices. This substantial cryptocurrency position adds another dimension to a company already spanning rockets, satellites, artificial intelligence, and now blockchain assets. The combination creates an unprecedented technology conglomerate with capabilities ranging from launching satellites to developing cutting-edge AI models.
However, the merger is not without controversy and potential regulatory hurdles. Executives at both companies have not responded to questions about whether the deal may require review by the Committee on Foreign Investment in the United States, given SpaceX's significant government contracts and national security implications. Additionally, xAI is facing regulatory probes in multiple international jurisdictions after its Grok AI tools reportedly enabled users to generate inappropriate content, raising questions about how these issues might affect the combined company's reputation and regulatory standing.
The announcement sent shockwaves through both the technology and financial sectors, with analysts scrambling to assess the implications of such a massive combination. The deal surpasses previous record-holders for the largest merger in history and establishes Musk as the architect of an industrial empire spanning transportation, space exploration, social media, and artificial intelligence. News of the potential SpaceX IPO first broke in December, with Musk confirming reports about the planned offering were accurate, setting the stage for what could be the most significant market debut since the company's founding over two decades ago.
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