Elon Musk said Monday that SpaceX has acquired his artificial intelligence startup xAI in a record deal that unifies Musk’s AI and space ambitions by combining the rocket and satellite company with chatbot maker Grok.
The agreement, first reported by Reuters last week, represents one of the most ambitious tie-ups ever in the technology sector, combining a space and defense entrepreneur with a fast-growing AI developer whose costs depend largely on chips, data centers and energy. It could also bolster SpaceX’s data center ambitions, as Musk competes with rivals such as Alphabet’s Google, Meta, Anthropic and Amazon-backed OpenAI in the AI sector.
The transaction values SpaceX at $1 trillion and xAI at $250 billion, according to a person familiar with the matter.
“This marks not only the next chapter, but the next book in SpaceX and xAI’s mission: to evolve to create a sentient sun to understand the Universe and extend the light of consciousness to the stars!” » Musk said.
The xAI purchase sets a new record for the world’s largest M&A deal, a distinction held for more than 25 years when Vodafone bought Germany’s Mannesmann in a hostile takeover valued at $203 billion in 2000, according to data compiled by LSEG.
The combined company of SpaceX and xAI is expected to price its shares at around $527 each, another person familiar with the matter said. SpaceX was already the world’s most valuable private company, last valued at $800 billion in a recent insider stock sale. xAI was last valued at $230 billion in November, according to the Wall Street Journal.
The merger comes as the space company plans a blockbuster public offering this year that could value it at more than $1.5 trillion, two people familiar with the matter said.
SpaceX, xAI and Musk did not immediately respond to requests for comment.
The deal further consolidates Musk’s business empire and fortune into a tighter, mutually reinforcing ecosystem — what some investors and analysts informally call the “Muskonomy” — that already includes Tesla, brain chip maker Neuralink and tunneling company The Boring Company.
The richest man in the world has a history of merging his companies. Musk integrated social media platform X into xAI via a stock swap last year, giving the AI startup access to the platform’s data and distribution. In 2016, he used Tesla stock to buy his solar energy company SolarCity.
The deal could focus regulators’ and investors’ attention on governance, valuation and conflicts of interest given overlapping leadership roles at multiple companies, as well as the potential movement of engineers, proprietary technologies and contracts between entities.
SpaceX also holds billions of dollars in federal contracts with NASA, the Department of Defense and intelligence agencies, all of which have some authority to review M&A deals from the perspective of national security and other risks.
