Musk acquires xAI and combines its space technology with artificial intelligence

The deal, which was already reported by Reuters last Thursday, is one of the most ambitious moves in the technology sector to date, as it unites a space and defense contractor with an artificial intelligence developer whose prices stem mainly from processors, data centers and electricity.

It also could bolster SpaceX’s data center ambitions as Musk competes with rivals like Google, Meta and OpenAI in the artificial intelligence space.

The combined company is expected to issue shares at a price of approximately $527 per share, and enjoy a market value of $1.25 trillion, as previously reported on the Bloomberg website. Under the merger agreement, xAI will become a wholly owned subsidiary of SpaceX, said a source briefed on the condition of anonymity. The merger comes as SpaceX plans an impressive public offering this year that could value it at more than $1.5 trillion, Reuters reported.

The deal further unites Musk’s business and capital empire into a tight-knit and robust ecosystem, which investors and analysts say is called the “Maskonomy” — which already includes Tesla, brain chip developer Neurelink and the Boring Tunnel company.

The richest man in the world has a history of mergers between his ventures. Musk integrated social media platform X with xAI through a stock conversion last year, giving the startup access to its platform data and distribution. In 2016, he used Tesla stock to buy solar energy company SolarCity.

The agreement may attract regulatory and investor attention regarding management, valuation and conflicts of interest given Musk’s overlapping leadership roles across multiple companies, as well as the possibility of transferring engineers, proprietary technology and contracts between the parties.

SpaceX also holds many funds for federal contracts with NASA, the Department of Defense and intelligence agencies, all of which have authority to review merger and acquisition deals for national security risks and other factors.