SpaceX, the rocket and satellite maker led by Elon Musk, said on Monday it had acquired xAI, the artificial intelligence company controlled by Mr. Musk, a sweeping move to consolidate his business empire as it faces questions about the cost of its AI ambitions.
The exact financial details of the deal were not disclosed, but the acquisition cements SpaceX’s standing as the most valuable private company in the world, and creates a company worth more than $1 trillion.
The combined company, with a portfolio including rockets, an A.I. chatbot, and the social media platform X, will probably move forward with an initial public offering around June, said two people familiar with the plan who spoke on the condition of anonymity because the details weren’t public. Mr. Musk hopes to raise about $50 billion with the offering, they added.
By merging the companies, Mr. Musk provided a financial lifeline to xAI, which was founded later than A.I. rivals and has spent billions of dollars to catch up. SpaceX, also a heavy spender, will take on a slice of the A.I. boom and add fuel to Mr. Musk’s recent ambition to build data centers, the computing sites for powering the technology, in space.
“SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications, and the world’s foremost real-time information and free speech platform,” Mr. Musk wrote in a memo addressed to some of his employees and obtained by The New York Times. Building data centers in space was a primary driver for the transaction, he added.
The unusual arrangement demonstrates how Mr. Musk, the world’s richest man, increasingly views his various businesses as interconnected, even when there are no obvious overlaps. Last year, he merged X with xAI to consolidate the companies’ data, computing power, and workforce.
Now he’s taking an even bigger leap, merging the often-troubled A.I. start-up with SpaceX, the most successful private space company in the world.
Mr. Musk, in a memo sent to workers at SpaceX and xAI, described the combined operation in lofty language that evoked science-fiction tales of humanity conquering space and traveling through the galaxy. The merger also helps Mr. Musk with a more earthly ambition to give his company more financial heft.
But it would take a leap of faith to understand how a company that combined social media with an A.I. chatbot will help SpaceX achieve what Mr. Musk has long described as its ultimate goal: taking humans to Mars.
SpaceX confirmed the acquisition on its website and shared Mr. Musk’s memo. Representatives for SpaceX and xAI did not return requests for comment. Mr. Musk did not respond to an emailed request for comment.
Ross Gerber, an investor in several of Mr. Musk’s ventures, said in a social media post that investors had been told the combined company was valued at $1.25 trillion.
SpaceX informed investors that it was valued at $1 trillion, up from a roughly $800 billion valuation in December, said one of the people familiar with the plan as well as a third person with knowledge of it, who also spoke on the condition of anonymity. The deal valued xAI at $250 billion, the people said.
In a separate email to xAI employees, sent after the deal announcement and seen by The Times, xAI said the AI company’s valuation would remain unchanged since its January fund-raising round and that most jobs would be unaffected by the merger.
While a public offering would probably occur this year, “whether it actually happens, when it happens, and at what valuation are still highly uncertain,” the unsigned email said. “But the thinking is that if we execute brilliantly and the markets cooperate, a public offering could raise a significant amount of capital.”
In a briefing with investors on Monday afternoon, SpaceX representatives said the deal would be funded by issuing $250 billion in new shares, according to one of the people familiar with the plan who was on the call. That means SpaceX’s longtime backers were forced to drastically reduce their ownership stake in the company to pay for the acquisition.
Mr. Musk’s bet is that the combined enterprise will eventually be worth far more than SpaceX would have been on its own, the person said.
Tesla, Mr. Musk’s automaker, is a publicly traded company that must disclose its financial information and other matters to shareholders. Mr. Musk prevailed in a battle with some of Tesla’s shareholders over a $1 trillion pay package last year.
Most of his companies, however, are privately held and more opaque. Because of that, he doesn’t need to seek stakeholder approval for many of his business decisions.
