Updated version 2 - SpaceX states that any potential merger with Tesla requires approval from Elon Musk.

Background information and details have been added in paragraphs 5 and 8-10.

Reuters, October 22 - SpaceX SPCX.O said on Thursday that any potential merger with Tesla TSLA.O would need the approval of controlling shareholder Elon Musk, even though the entrepreneur has recused himself from negotiations between his two companies due to a conflict of interest.

Musk, currently the world’s richest person, said on Tuesday that a merger between SpaceX and Tesla would be a "good idea" (link), adding that both sides have set up a special committee to discuss the deal.

In a regulatory filing submitted on Thursday, SpaceX stated: "Our special committee has not made any decision regarding any potential merger, and any potential merger would require further approval from the special committee, the board of directors, and the controlling shareholder."

Several Wall Street analysts said they believe the merger between Tesla and SpaceX is a matter of "when" not "if," but they are divided over how much Tesla shareholders should receive from the transaction.

According to a Reuters report earlier on Thursday (link), Musk’s public support this week for the potential $3.5 trillion merger deal has unsettled some insiders involved in the discussions, who worry that his comments might draw additional scrutiny from shareholders and set the process back by weeks.

Musk owns nearly one-fifth of Tesla and controls voting power at SpaceX. Analysts said the merger would give him control over the newly combined entity and could further consolidate his influence.

A person directly familiar with the negotiations told Reuters that this disclosure has created "a mess" for the merger process, as it raises concerns about whether Tesla shareholders’ interests will be adequately protected.

Merging the two companies could also streamline decision-making (link), since multiple companies each require separate approval from their boards and shareholders. As companies actively advance into the artificial intelligence sector, this potential merger would enable management to more flexibly allocate capital, engineering talent, and infrastructure to more promising projects.

Tesla on Wednesday lowered its annual capital expenditure forecast to around $20 billion (link), down from the previously forecasted over $25 billion. SpaceX’s capital expenditures for the fourth quarter are projected to be between $35 billion and $40 billion (link).

SpaceX is a major contractor for the U.S. military, intelligence agencies, and NASA. Meanwhile, Tesla has close ties with China through its Shanghai factory, which plays a key role in vehicle production and sales.
In after-hours trading, SpaceX shares rose about 1%, while Tesla shares fell slightly.

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