A potential merger between Tesla and SpaceX is increasingly being viewed on Wall Street as a question of when, rather than if. However, the prospect of combining Elon Musk’s electric vehicle maker with the privately controlled space and artificial intelligence company has raised a key question: how much of a premium should Tesla shareholders receive?
According to Reuters, estimates of the premium Tesla shareholders could demand in exchange for swapping their stakes in the publicly traded automaker for shares in SpaceX range from little or nothing to as much as 35%. With Tesla valued at around $1.5 trillion, even a modest premium could add hundreds of billions of dollars to the potential transaction’s value.
Musk, who has described himself as a “conflicted party," has said the committees overseeing the proposed transaction have yet to agree on terms. Nevertheless, Wall Street expects a proposal could emerge in the coming months.
The exchange ratio and the premium offered to Tesla shareholders are likely to be among the biggest points of contention in any potential deal.
Analysts at RBC Capital Markets and JPMorgan said that they expect investors to seek a premium of 20% to 35% to compensate them for exchanging their stakes in an independent, publicly listed company for shares in SpaceX, which Musk controls.