Elon Musk said Monday that SpaceX has acquired his artificial intelligence startup xAI in a record deal that unifies Musk’s space and AI ambitions by combining the rocket and satellite company with chatbot maker Grok.
The agreement, first reported by Reuters last week, represents one of the most ambitious alliances in the technology sector yet, combining a space and defense contractor with a fast-growing artificial intelligence developer whose costs depend heavily on chips, data centers and energy. It could also bolster SpaceX’s data center ambitions as Musk competes with rivals such as Alphabet’s Google, Meta, Amazon-backed Anthropic and OpenAI in the AI sector.
The transaction values SpaceX at $1 trillion and xAI at $250 billion, according to a person familiar with the matter.
“This marks not only the next chapter, but the next book in SpaceX and xAI’s mission: scaling to create a sentient sun to understand the Universe and extend the light of consciousness to the stars!” Musk said.
The purchase of xAI sets a new record for the world’s largest M&A deal, a distinction that stood for more than 25 years when Vodafone bought Germany’s Mannesmann in a hostile takeover valued at $203 billion in 2000, according to data compiled by LSEG.
The combined SpaceX and xAI company is expected to price shares at around $527 each, another person familiar with the matter said. SpaceX was already the most valuable private company in the world, last valued at $800 billion in a recent insider stock sale. xAI was last valued at $230 billion in November, according to the Wall Street Journal.
The merger comes as the space company plans a blockbuster public offering this year that could value it at more than $1.5 trillion, two people familiar with the matter said.
SpaceX, xAI and Musk did not immediately respond to requests for comment.
The deal further consolidates Musk’s sprawling business empire and fortunes into a tighter, mutually reinforcing ecosystem – what some investors and analysts informally call the “Muskonomy” – that already includes Tesla, brain chip maker Neuralink and tunneling company The Boring Company.
The world’s richest man has a history of merging his companies. Musk brought social media platform In 2016, he used Tesla stock to buy his solar energy company SolarCity.
The deal could draw scrutiny from regulators and investors over governance, valuation and conflicts of interest, given Musk’s overlapping leadership roles at multiple companies, as well as the potential movement of engineers, proprietary technology and contracts between entities.
SpaceX also has billions of dollars in federal contracts with NASA, the Department of Defense and intelligence agencies, all of which have some authority to review M&A transactions for national security and other risks.
