Tesla and SpaceX take first step towards merger, would dilute all shareholders

According to Electrek, Tesla and SpaceX have each formed special board committees to formally explore a merger between the two companies. The move follows SpaceX's second quarterly earnings call since going public and could dilute shareholders across major stock indices.

The article states that Musk, who leads both companies, has long sought greater control over Tesla, where his ownership stands around 22 percent. His compensation packages at both firms include massive stock grants tied to operational milestones such as robot production and Mars colonization, but contain provisions that would automatically award those shares upon a merger regardless of whether milestones are met. The "independent" board committees reviewing the deal have previously approved Musk's pay packages, raising questions about their independence.

If the committees endorse the merger, shareholder votes would follow. At SpaceX, Musk controls more than half the voting power, making approval likely. At Tesla, a majority of all outstanding shares must approve, prompting the company to introduce an auto-vote feature that defaults to board recommendations. The article notes a similar dynamic preceded Tesla's 2016 acquisition of SolarCity.

Source

Tesla and SpaceX take first step towards merger, would dilute all shareholders — Electrek