Elon Musk's SpaceX announced it is acquiring xAI, the company behind Grok and other AI products, in a merger that will leave both companies with a combined value of $1.25 trillion, Bloomberg, Reuters, and The Information reported on Monday.
The deal, worth $250 billion according to The Information, aims to improve SpaceX's position in its reportedly future IPO, which is being described as potentially the biggest in history.
"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," said SpaceX in a statement.
According to Reuters, people familiar with the matter confirmed that investors in xAI will receive 0.1433 shares of SpaceX for each xAI share as part of the acquisition.
Some xAI executives may also opt for cash instead of SpaceX stock at $75.46 per share, according to a person familiar with the matter, who reported to Reuters.
Sending AI to space
The statement adds, "This marks not just the next chapter, but the next book in SpaceX and xAI's mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!"
According to Musk, the objective of the merger is to establish a program capable of meeting the energy demands of AI data centers by building them in outer space, where "the sun is always shining."
According to reports from several specialized outlets, the merger could increase SpaceX's value even further ahead of a possible IPO, with some estimates placing the company's value at about $527 per share and a total of $1.5 trillion.
This doesn't represent the first time Musk has decided to merge his companies. Earlier this year, the X social platform (formerly Twitter) was folded into xAI through a share swap to give the AI company access to the platform’s data and distribution.
In a similar way, Musk used Tesla stock in 2016 to acquire his solar-energy company, SolarCity.
The main question now is how the contracts SpaceX holds with NASA, the Department of Defense, and intelligence agencies could affect the deal, given that companies with such agreements are typically subject to M&A transactions reviewed for national security and other risks.