Tesla–SpaceX Deal Faces a 50% Shareholder Approval Threshold
New Street Research managing director Pierre Ferragu called a SpaceX–Tesla combination “extremely tangible,” citing Elon Musk’s endorsement and special committees at both companies reviewing the proposal. But he said winning approval at Tesla would require support from 50% of all shareholders, not just half of those who vote. Investors would also have to weigh Musk’s likely control of a combined company and assess SpaceX, a business many Tesla shareholders may know less well.
Tesla’s approval would require reaching beyond the shareholders who vote
Pierre Ferragu called a possible SpaceX–Tesla combination “extremely tangible,” pointing to Elon Musk’s comments and committees at both companies considering it. Those committees, Ferragu said, would need to produce a proposal. He described decision-making at SpaceX as ultimately resting with Musk.
A Bloomberg banner characterized the possibility as a “$3.5T merger.” Ferragu’s focus was on what a proposal would have to clear at Tesla: agreement from 50% of all shareholders, not simply half of the shareholders who cast votes.
Musk owns about 20% of Tesla, Ferragu said. Retail investors hold close to 30%, while institutional investors have low-single-digit stakes. Getting agreement would mean assembling support across those groups, rather than relying only on the votes cast. Ferragu said that support could be pulled together, but that securing it would be a substantial job.
The practical challenge, as he described it, is pursuing proxies and getting shareholders’ votes aligned. The question is not only whether a proposal can attract support, but whether the companies can reach enough holders to meet the threshold Ferragu identified.
It’s going to be interesting to see how they’re going to go after these proxies and get the vote aligned.
A Tesla vote would not settle the question of Musk’s control
Shareholder approval is separate from the governance question: whether Tesla investors would accept a combined company in which Musk retained very strong voting control. Asked whether such a deal was possible, Ferragu said he was not qualified to give a definitive legal answer.
He contrasted Musk’s roughly 20% ownership of Tesla with his control of more than 80% of SpaceX’s voting rights. The figures describe different things—ownership in Tesla and voting control at SpaceX—but Ferragu said they suggested Musk would still have “very tremendous control” in a combined entity.
That possibility, he said, could become part of the discussion, and Tesla shareholders might be “very demanding and picky” about it. A proposal would therefore face two distinct questions: whether enough Tesla shareholders agree to the transaction, and whether they accept the control structure that comes with it.
Tesla investors may need to assess a business they know less well
Ferragu also pointed to a difference in what investors may know about the two companies. Some Tesla investors, he said, have a deep understanding of Tesla but do not necessarily understand SpaceX as well. He described SpaceX as a very new business and a very new company.
For those investors, evaluating a combination would mean considering a business outside the one they already know well. Ferragu said educating them would be part of convincing them of the merger’s merits. That case would sit alongside the work of gathering proxy support and addressing concerns about Musk’s voting control.