JPMorgan Chase: Investors underestimate the potential obstacles of a merger between Tesla and SpaceX.

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Golden Finance reported that on July 8, JPMorgan analyst Rajat Gupta said that although the merger of Tesla and SpaceX “looks reasonable on paper,” current speculation about the merger has underestimated potential obstacles that could hinder the deal. Gupta said the merger would allow CEO Elon Musk to “combine the vision, mission, and engineering leadership of both platforms,” and the companies’ shared AI ambitions would become “a potential strategic glue.” However, the analyst said potential obstacles include regulatory approvals across multiple jurisdictions; the symmetry of governance and voting rights; and the view that “outsiders believe the merger would be an acquisition led by SPCX rather than an equal merger.” He added, “Overall, we will focus on SPCX’s acquisition currency, the regulatory landscape, and Musk’s voting power in Tesla, as catalysts for a potential merger coming closer.” JPMorgan said that if the deal were to happen, the most likely structure would be a SpaceX-led, all-stock acquisition of Tesla. Gupta said this deal structure could best bridge the valuation gap and avoid large-scale cash outlays. Gupta rates Tesla as Neutral, with a target price of $475.
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