Elon Musk announces SpaceX has bought another of his companies in a deal that shatters Vodafone's 25-year record: We will create 'a conscious sun that understands the Universe'

Elon Musk said on Monday that his aerospace company SpaceX has acquired xAI, his artificial intelligence startup, in a record deal that unifies his AI and space ambitions by combining the rocket and satellite company with chatbot developer Grok.

The deal, first revealed by Reuters last week, is one of the most ambitious tech mergers to date, bringing together a space and defense contractor with a fast-growing AI developer. The deal could bolster SpaceX's data center ambitions as Musk competes in the AI ​​sector with rivals such as Google, Meta, OpenAI and Anthropic.

The deal values ​​SpaceX at $1 trillion and xAI at $250 billion, according to a person familiar with the matter. Neither of Musk's two companies are publicly traded, so the valuation is private.

As part of the purchase, xAI investors will receive 0.1433 SpaceX shares for each share of the artificial intelligence company, according to the Reuters source. Some xAI executives may also opt for cash instead of SpaceX stock at a price of $75.46 per share, the person said.

“This marks not just the next chapter, but the next book in SpaceX and xAI's mission: scaling to create a conscious sun that understands the Universe and extends the light of consciousness to the stars!” Musk said.

The transaction between Musk's companies surpasses the record held by Vodafone

The acquisition of xAI sets a new record for the world's largest M&A (mergers and acquisitions) deal, a title held for more than 25 years after Vodafone bought Germany's Mannesmann in a hostile takeover valued at $203 billion in 2000, according to London Stock Exchange data.

The company resulting from the combination of SpaceX and xAI is expected to set a share price of about $527 apiece, according to another person familiar with the situation. SpaceX was already the world's most valuable private company, recently valued at $800 billion following an internal stock sale. xAI was last valued at $230 billion in November, according to The Wall Street Journal.

The merger comes as his aerospace company plans a sizeable initial public offering later this year that could value it at more than $1.5 trillion, two people familiar with the situation told Reuters.

The transaction further consolidates Musk's sprawling business empire and wealth into a tighter ecosystem of mutually supportive elements — what some investors and analysts informally call “Muskonomia” — that already includes Tesla, neural chip maker Neuralink and tunneling company The Boring Company.

“Starlink was already a cash flow engine, and now it's adding a layer of AI revenue on top, while also becoming a distribution surface for AI services and data,” said Ali Javaheri, PitchBook's senior analyst for emerging space. Starlink is the satellite internet system operated by SpaceX.

“With policy changes allowing the use of certain customer data to train models and the prospect of orbital data centers, SpaceX is positioning itself as an integrated infrastructure platform capable of serving both commercial and government use cases, which is a much stronger narrative in the prospect of a public listing,” Javaheri added.

Elon Musk is not the first transaction of this kind

Musk, the world's richest man, has a history of merging businesses with each other. He integrated social media platform “X” into xAI last year through a stock exchange, giving the AI ​​startup access to the social media platform's data and distribution channels.

In 2016, he used Tesla stock to buy his solar company, SolarCity.

The deal could draw regulatory and investor attention to governance, valuation and conflicts of interest issues, given Musk's overlapping leadership roles at multiple companies, as well as the possible flow of engineers, proprietary technology and contracts between the entities.

SpaceX also holds multibillion-dollar US federal government contracts with NASA, the Department of Defense and intelligence agencies — all of which have some degree of authority to review M&A deals for national security and other risks.