Elon Musk’s rocket company, SpaceX, has bought his artificial intelligence startup, xAI. The deal values the combined companies at 1.25 trillion dollars. According to CNBC, this is the largest merger ever recorded.
As part of the deal, SpaceX is valued at 1 trillion dollars and xAI at 250 billion dollars. The agreement was confirmed by documents reviewed by CNBC.
Musk, who is also the CEO of Tesla, shared the news in a blog post. He said the merger will help create a powerful and fully connected technology system. This system will bring together artificial intelligence, rockets, space-based internet, and the social media platform X.
One main goal of the merger is to build “orbital data centers.” These are data centers placed in space to support growing AI needs.
The deal comes before SpaceX’s expected initial public offering (IPO) later this year. Reports say SpaceX may try to raise up to 50 billion dollars, with a possible valuation of 1.5 trillion dollars.
The merger is structured as a share exchange. Each share of xAI will be converted into 0.1433 shares of SpaceX stock. Documents show xAI shares valued at 75.46 dollars and SpaceX shares at 526.59 dollars.
Bank estimates place SpaceX’s value between 859 billion and 1.26 trillion dollars. xAI’s value is estimated between 219 billion and 294 billion dollars.
Another key reason for the merger is funding. xAI, which created the Grok chatbot, needs more capital. The company is spending heavily to compete with other AI companies like OpenAI and Anthropic.
OpenAI was valued at 500 billion dollars last October. Anthropic recently signed a deal valuing it at 350 billion dollars. By comparison, xAI was valued at around 230 billion dollars in a funding round completed last month.
Musk co-founded OpenAI but left the company in 2018. He started xAI in 2023. Recently, Grok has faced criticism for allowing users to create inappropriate images, including images of children.
SpaceX could benefit from growing demand for space-based data centers. The company builds reusable rockets and satellites. It is best known for its Starlink satellite internet service. SpaceX also works with NASA and the US Department of Defense, including support for moon missions.
Reports about a possible SpaceX IPO first appeared in December. Musk later confirmed the report was accurate. According to the Financial Times, he is planning the public debut for mid-June, possibly timed with his birthday and a special planetary alignment.
