The world's richest man, Elon Musk, has announced that space company SpaceX will merge with AI startup xAi. According to the billionaire's plan, the merger of his companies will create the most innovative project on Earth, combining space technology with artificial intelligence and promoting a freer exchange of information.
Finam explains what makes SpaceX and xAI so remarkable and how their merger could become the biggest deal in history.
SpaceX - cosmic success and IPO plans
In 2001, Elon Musk conceived the idea of building an experimental greenhouse on Mars with seeds fed by a special gel. However, no one was interested in the entrepreneur's idea, and NASA lacked both the budget and the technology to implement such a project.
So, in 2002, Musk started SpaceX, which was all about making cheap, reusable rockets. To make it happen, Musk hired some experienced space engineers and put $100 million of his own money into SpaceX by 2006.
The company created the Falcon 1 rocket, a two-stage liquid-fueled vehicle designed to launch small satellites into orbit. Falcon 1 was significantly cheaper to manufacture and operate than its competitors from Lockheed Martin and Boeing.
In March 2006, SpaceX made its first Falcon 1 launch, which started successfully but ended prematurely due to a fuel leak and fire. However, by that time, the company had already earned millions of dollars in launch orders, many of which came from the US government.
In 2010, SpaceX launched the heavier Falcon 9 rocket, and in 2011, it began developing the super-heavy Falcon Heavy rocket, which it successfully launched in 2018.
In December 2010, SpaceX became the first commercial company to launch the Dragon spacecraft. In May 2012, it became the first commercial spacecraft to dock with the ISS, to which it successfully delivered cargo.
In 2019, SpaceX began launching Starlink, providing satellite internet. In May 2020, the first manned flight of the Dragon spacecraft with astronauts on board to the ISS took place.
In 2025, SpaceX reached 500 rocket launches. At the end of last year, information emerged that SpaceX was preparing for an initial public offering in 2026.
xAI - promising creator of the Grok chatbot
The startup xAI is relatively young. It was founded in 2023 at the height of the generative artificial intelligence boom and immediately focused on creating large language models. One of the company's first products was the generative AI-based chatbot Grok, which provides answers in real time. Musk's team integrated Grok into the X social network, which provided it with an extensive customer base.
In 2024, xAI launched Colossus, the world's largest supercomputer. In addition, Aurora, an AI model for converting text into images, was released. In the same year, the company attracted $6 billion in investments.
In 2025, xAI continued to develop actively and released an updated version of its chatbot, Grok 3, which proved to be particularly good at programming.
The largest deal in M&A history
This week, it became known that Elon Musk intends to merge his two companies. According to Reuters, the merger of SpaceX and xAI could be the largest deal in the history of the mergers and acquisitions (M&A) market. According to a source familiar with the situation, the deal will value SpaceX at $1 trillion and xAI at $250 billion. The previous record, set in 2025 by Vodafone, which acquired the German company Mannesmann for $203 billion, stood for 25 years.
xAI investors will receive 0.1433 SpaceX shares for each xAI share as part of the acquisition. Some xAI executives may prefer cash shares of SpaceX at a price of $75.46. Shares of the combined SpaceX and xAI company are expected to be worth around $527 per share.
SpaceX was already the world's most valuable private company, with a recent valuation of $800 billion during a recent insider stock sale. The combined SpaceX and xAI company is expected to seek a valuation of $1.5 trillion in its 2026 IPO and aims to raise $50 billion.
The deal could draw the attention of regulators and investors to governance and conflict of interest issues, given that Musk holds leadership positions at several companies, as well as the potential movement of engineers, patented technologies, and contracts between organizations.
SpaceX has also signed billions of dollars in federal contracts with NASA, the Department of Defense, and U.S. intelligence agencies, which have the right to review mergers and acquisitions to assess risks.
The merger of SpaceX and xAI is expected to allow Musk to further develop the ecosystem of his own business empire by creating complementary products. The billionaire's ambitions are enormous — he wants to create the largest platform on Earth and in space, combining space technology, artificial intelligence, and social networking. For example, his Starlink satellites will be able to earn significantly more with the use of AI.
