Billionaire Elon Musk said on Monday that his rocket company SpaceX has acquired his artificial intelligence startup xAI in what is being described as a record-breaking deal. The deal was announced through an internal memo. 

“To the stars! @SpaceX & @xAI are now one company,” Musk said in a post shared on X.

SpaceX said the acquisition is aimed at strengthening Musk’s presence in both the space and artificial intelligence sectors, as per AP.

With this deal, several of Musk’s businesses will come together under one umbrella. These include the AI chatbot Grok, satellite internet service Starlink, and social media platform X (formerly Twitter).

IPO plans add strategic context

The development comes at a time when SpaceX is preparing for an initial public offering (IPO). The IPO could raise up to $50 billion and value the company at around $1.25 trillion, Bloomberg reported. Reports also mentioned that a possible merger with Tesla was discussed.

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The deal, first reported by Reuters last week, is expected to support SpaceX’s plans to expand its data-centre capabilities. This would help Musk compete with major AI players such as Google, Meta, Amazon-backed Anthropic and OpenAI.

The acquisition of xAI has set a new global record for the largest mergers and acquisitions deal ever. The previous record was held for more than 25 years, when Vodafone acquired Germany’s Mannesmann in a hostile takeover worth $203 billion in 2000, according to LSEG data.

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SpaceX was already the world’s most valuable privately held company and was last valued at $800 billion during a recent insider share sale. xAI was last valued at $230 billion in November, according to the Wall Street Journal.

The merger comes as SpaceX is planning a major public listing later this year that could value the company at more than $1.5 trillion, Reuters reported citing two sources.

Musk’s previous strategic mergers

Musk has previously merged his companies to strengthen their operations. Last year, he folded social media platform X into xAI through a share swap, allowing the AI startup to use X’s data and reach. In 2016, Tesla acquired Musk’s solar company SolarCity using its own stock.

SpaceX also holds billions of dollars’ worth of federal contracts with agencies such as NASA, the US Department of Defense and intelligence bodies. These agencies have the authority to review major deals for national security and other related risks.