Elon Musk reportedly structured SpaceX’s acquisition of xAI using a strategic merger design that could minimize debt exposure, limit legal liability and keep the company’s long-awaited IPO on track.
A Merger Built For Protection, Not Integration
Instead of fully combining SpaceX and xAI, Musk opted for a structure known as a triangular merger, reported Reuters, citing people familiar with the transaction.
Under this approach, xAI remains a wholly owned subsidiary of SpaceX, preserving its separate legal and financial identity.
As a subsidiary, xAI retains responsibility for its own contracts, debts and liabilities, helping shield SpaceX from potential regulatory probes and lawsuits tied to X, the social media platform operated by xAI, the report said.
The deal between SpaceX-xAI forms a $1.25 trillion company that plans to go public later this year to fund Musk’s vision of deploying data centers in space.
How The Structure Avoided Massive Debt Repayment
Financially, the deal helped SpaceX sidestep a major risk: triggering change-of-control clauses that could have forced xAI to repay billions of dollars in debt immediately.
xAI inherited significant borrowings from its earlier acquisition of X and has added more debt since.
By executing the transaction through multiple intermediary entities, SpaceX reportedly avoided activating those clauses, eliminating the need to refinance debt while interest rates remain elevated.
Tax Benefits For Shareholders
The all-stock transaction was also structured as a tax-free reorganization, allowing xAI shareholders to defer capital gains taxes until they sell their SpaceX shares.
xAI was valued at roughly $250 billion in the deal, while SpaceX was valued at about $1 trillion.
SpaceX and xAI did not immediately respond to Benzinga’s request for comments.
Why The IPO Timeline Still Holds
Despite the scale of the acquisition — the largest M&A deal on record — securities lawyers say it is unlikely to delay SpaceX’s anticipated IPO later this year, the report noted.
Because xAI may fall below the SEC’s “significant subsidiary” threshold, SpaceX may not be required to include xAI’s full financials in its IPO filings.
On Wednesday, reports said SpaceX is seeking an accelerated path into major stock indexes, with advisers already in talks with index providers, including Nasdaq, about early inclusion.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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