Elon Musk announced on Monday that SpaceX has acquired his artificial intelligence venture xAI in a landmark deal that brings together his space and AI initiatives, merging the aerospace firm with the developer of the Grok chatbot.
The acquisition, first reported by Reuters last week, is among the most ambitious partnerships in the tech industry, combining a space and defence contractor with a rapidly expanding AI company whose expenses are largely tied to advanced chips, data centres, and energy use. The move could also strengthen SpaceX’s data centre strategy as Musk competes with AI rivals such as Alphabet’s Google, Meta, Amazon-backed Anthropic, and OpenAI. According to a source familiar with the transaction, the deal values SpaceX at $1t and xAI at $250b.
Under the agreement, xAI investors will receive 0.1433 shares of SpaceX for each xAI share they hold. Some xAI executives may also choose to receive cash instead of SpaceX shares, priced at $75.46 per share, the source added.
Musk described the transaction as a major milestone for both companies, saying it represents a new phase in their shared goal of advancing artificial intelligence and expanding humanity’s understanding of the universe.
The acquisition sets a new record for the largest M&A deal globally, surpassing Vodafone’s $203b hostile takeover of Germany’s Mannesmann in 2000, according to LSEG data. Another source familiar with the matter said shares in the combined SpaceX-xAI entity are expected to be priced at around $527 each. SpaceX was previously valued at $800b following a recent insider share sale, whilst xAI was valued at $230b in November, according to the Wall Street Journal.
The merger comes as SpaceX prepares for a potential blockbuster initial public offering later this year that could value the company at more than $1.5t, according to people familiar with the plans.
SpaceX, xAI, and Musk did not immediately respond to requests for comment.
The deal further integrates Musk’s wide-ranging business ventures into a closely linked ecosystem, sometimes referred to by investors as the “Muskonomy,” which also includes Tesla, brain-chip developer Neuralink, and tunnelling firm The Boring Company. Musk has a history of consolidating his businesses, having merged social media platform X into xAI through a share swap last year to provide the AI startup with access to the platform’s data and distribution network. In 2016, he also used Tesla stock to acquire solar energy company SolarCity.
The transaction could attract scrutiny from regulators and investors regarding governance, valuation, and potential conflicts of interest due to Musk’s leadership roles across multiple companies, as well as the potential transfer of talent, proprietary technologies, and contracts among them.
SpaceX also maintains billions of dollars in federal contracts with agencies including NASA, the Department of Defense, and intelligence bodies, all of which may review the deal for national security and other regulatory concerns.
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