Billionaire investor Bill Ackman has proposed merging SpaceX with Pershing Square SPARC Holdings, a special purpose acquisition rights vehicle created by his firm, Pershing Square Capital Management. This merger would give Tesla Inc. shareholders priority access to invest in SpaceX.
Proposed Structure
The structure would distribute special purpose acquisition rights, or SPARs, to Tesla shareholders, allowing them to invest directly in SpaceX or receive cash for their rights. As Ackman noted, “This would reward loyal Tesla shareholders with the opportunity to invest in SpaceX, while totally democratizing the IPO process.”
Aligning with Previous Comments
The proposal aligns with previous comments from Elon Musk, who expressed his desire for Tesla supporters to have ownership access to SpaceX. This move could mark a significant step in making SpaceX more accessible to a broader range of investors.
SPARC Structure Details
- The proposed transaction would distribute 0.5 SPARs per Tesla share, resulting in approximately 1.723 billion SPARs outstanding.
- Each SPAR would be exercisable for two shares of SpaceX, implying a total of 3.446 billion shares.
- The structure eliminates underwriting fees, founder stock, and shareholder warrants while maintaining 100% common stock capitalization.
- Pershing Square would also waive its sponsor warrant rights.
Capital Raising Flexibility
The proposal allows for significant flexibility in capital raising:
- At an exercise price of $11.03 per SPAR, SpaceX would raise about $42 billion in total capital.
- If the exercise price were set at $42, total proceeds would rise significantly to approximately $148.7 billion.
- The hedge fund investor noted that the structure allows flexibility between primary and secondary shares.
Future Offerings
If the proposed SPARC merger goes through, Ackman and Elon Musk would play key roles in shaping SpaceX’s funding and organizational structure. Additionally, SPAR holders who exercise their rights would receive Pershing Square SPARC Holdings II SPARs, providing potential future access to a public offering of Musk’s artificial intelligence company, xAI.
Conclusion
SpaceX is reportedly preparing for a potential IPO that could reach up to $1.5 trillion, far surpassing major aerospace rivals. Ackman’s SPARC proposal seeks to tap into this significant opportunity while providing Tesla shareholders with a unique chance to invest in SpaceX. With its innovative structure and potential for massive capital raising, this proposal could mark a pivotal moment in the history of both SpaceX and the aerospace industry.