LOS ANGELES, California: Elon Musk has pushed his business empire deeper into artificial intelligence, announcing on February 2 that SpaceX has acquired his AI startup xAI in a record-setting transaction that binds his space and AI ambitions into a single corporate structure.

The deal is among the most ambitious technology tie-ups to date, pairing a space-and-defense contractor with a rapidly growing AI developer whose costs are primarily driven by chips, data centers, and energy. The combination could also strengthen SpaceX's data center ambitions as Musk competes with AI rivals such as Alphabet's Google, Meta, Amazon-backed Anthropic, and OpenAI.

The transaction values SpaceX at US$1 trillion and xAI at $250 billion, according to a person familiar with the matter.

Under the terms of the acquisition, investors in xAI will receive 0.1433 shares of SpaceX for every xAI share they hold, the person said. Some xAI executives may also choose to take cash instead of SpaceX stock at $75.46 per share.

"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 acquisition sets a new benchmark for global mergers and acquisitions, surpassing a record that stood for more than 25 years: Vodafone's $203 billion hostile takeover of Germany's Mannesmann in 2000, according to LSEG data.

Following the deal, shares in the combined SpaceX-xAI company are expected to be priced at about $527 each, another person familiar with the matter said. SpaceX was already the world's most valuable privately held company, last valued at $800 billion in a recent insider share sale. xAI was valued at $230 billion in November, according to the Wall Street Journal.

The merger comes as SpaceX is preparing for a blockbuster initial public offering this year that could value the company at more than $1.5 trillion, two people familiar with the matter said.

SpaceX, xAI, and Musk did not immediately respond to requests for comment.

The transaction further consolidates Musk's sprawling portfolio of companies into a more tightly linked ecosystem, sometimes dubbed the "Muskonomy" by investors and analysts, which already includes Tesla, brain-implant firm Neuralink, and tunnel builder the Boring Company.

Musk has previously merged his ventures to create strategic overlap. Last year, he folded social media platform X into xAI through a share swap, giving the AI startup access to X's data and distribution. In 2016, he used Tesla stock to acquire the solar energy firm SolarCity.

The latest deal could draw scrutiny from regulators and investors over governance, valuation, and potential conflicts of interest stemming from Musk's overlapping leadership roles, as well as the possible movement of engineers, proprietary technology, and contracts between entities.

SpaceX also holds billions of dollars in federal contracts with NASA, the U.S. Department of Defense, and intelligence agencies, all of which have some authority to review mergers and acquisitions for national security and other risks.