SpaceX acquires xAI as Musk looks to unify AI and space ambitions

By Echo Wang and Joey Roulette Feb 2 (Reuters) – Elon Musk said on Monday that SpaceX has acquired his artificial-intelligence startup xAI, combining the rocket-and-satellite company with the maker of the Grok chatbot in a move aimed at unifying Musk's AI and space ambitions.  "This marks not just the next chapter, but the next book in SpaceX and xAI's mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!" Musk said. The deal, first reported by Reuters last Thursday, represents one of the most ambitious tie-ups in the technology sector yet, combining a space-and-defense contractor with a fast-growing AI developer whose costs are largely driven by chips, data centers and energy. It could also bolster SpaceX’s data center ambitions as Musk competes with rivals like Alphabet's Google, Meta, Amazon-backed Anthropic and OpenAI in the AI sector. The combined company is expected to price shares at about $527 each, and would have a valuation of $1.25 trillion, Bloomberg News reported earlier in the day. Under the merger agreement, xAI would become a wholly owned subsidiary of SpaceX, said a source familiar with the matter, who requested anonymity.  The merger comes as the space company plans a blockbuster public offering this year that could value it at over $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 far-flung business empire and fortunes into a tighter, mutually reinforcing ecosystem – what some investors and analysts informally call the "Muskonomy" – which already includes Tesla, brain-chip maker Neuralink and tunnel firm the Boring Company. The world's richest man has a history of merging his ventures together. Musk folded social media platform X into xAI through a share swap last year, giving the AI startup access to the platform’s data and distribution. In 2016, he used Tesla's stock to buy his solar-energy company SolarCity. The agreement could draw scrutiny from regulators and investors over governance, valuation and conflicts of interest given Musk's overlapping leadership roles across multiple firms, as well as the potential movement of engineers, proprietary technology and contracts between entities. SpaceX also holds billions of dollars in federal contracts with NASA, the Department of Defense and intelligence  agencies, which all have some authority to review M&A transactions for national security and other risks. (Reporting by Echo Wang in New York, Joey Roulette in Washington and Juby Babu in Mexico City; Editing by Alan Barona, Dawn Kopecki and Matthew Lewis)

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