Texas Attorney General-elect Nathan Johnson has vowed “tremendous scrutiny” of Elon Musk’s proposed Tesla-SpaceX combination, signaling that the potential merger could face closer examination from the state’s incoming leadership.
In a November 13 Bloomberg interview, Johnson said the proposed transaction would receive close attention. His comments come as the two companies reportedly work through merger terms, with an announcement possible as early as December or potentially in early 2027.
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Johnson, a Democrat and Texas state senator, defeated Republican Mayes Middleton in the November 3 attorney general election. He is due to take office in January 2027, succeeding Ken Paxton.
The warning does not amount to a formal investigation or establish that Texas intends to block the deal. It does, however, introduce another potential source of scrutiny for a transaction already facing questions about corporate governance, shareholder interests and national security.
Texas AG Has Merger Review Authority
The Texas Attorney General’s Office has an Antitrust Division responsible for investigating and prosecuting violations of the Texas Free Enterprise and Antitrust Act and federal antitrust laws.
The division says it reviews mergers to determine whether a proposed combination could substantially lessen competition. If it identifies potential violations, the office can bring legal action in state or federal court and coordinate investigations with federal regulators, including the Federal Trade Commission and Department of Justice.
That gives Johnson’s incoming administration a potential route to examine competition issues arising from a Tesla-SpaceX combination. However, the existence of that authority does not mean the attorney general has automatically opened a review or can independently veto the transaction.
The deal could also face federal and international regulatory questions. SpaceX holds US government and defense contracts, while Tesla has substantial manufacturing and commercial exposure in China. A combination could therefore require scrutiny of how sensitive government work, data and business operations would be separated.
Reuters reported on November 12 that these issues are among the regulatory challenges facing the proposed transaction, as the companies consider how to structure a combination.
Musk’s Dual Role Raises Governance Questions
The potential merger presents a conflict-of-interest challenge because Musk leads both companies and has significant ownership interests in each.
Both boards have established special committees of independent directors to examine a possible combination. Musk has said he is not participating in their deliberations because of his position on both sides of the proposed transaction.
The committees are intended to evaluate the deal independently, but their formation alone does not establish that their members are independent, that they have sufficient negotiating authority or that any eventual terms would be fair to shareholders.
A November 9 Bloomberg Law analysis examined how Texas corporate law could shape the process. Both companies are incorporated in Texas, according to their latest SpaceX and Tesla quarterly filings.
Under Section 21.4161 of the Texas Business Organizations Code, a corporation can petition a court to determine whether directors appointed to a special committee are independent and disinterested in a transaction involving a controlling shareholder, director or officer.
The provision could become relevant if either company seeks a court determination about its committee’s independence. Such a finding would not, by itself, establish that the merger’s valuation or exchange ratio is fair, or that shareholders have received adequate disclosures.
The transaction structure will also matter. If SpaceX acquires Tesla in an all-stock deal, Tesla shareholders would need to assess the value of the SpaceX shares offered in exchange, their ownership stake in the combined company and the voting rights attached to those shares.
Tesla-SpaceX Deal Could Create a $3.4T Company
The companies have moved beyond an initial exploration of a combination and are reportedly discussing transaction terms and governance arrangements.
Bloomberg reported on November 12 that an announcement could come as early as December, although discussions could also extend into early 2027. No definitive merger agreement has been announced.
SpaceX was valued at approximately $1.90 trillion following its June 2026 initial public offering, while Tesla’s market capitalization stood near $1.55 trillion at the previous market close cited in the reporting. Their combined value would exceed $3.4 trillion, based on those separate valuations.
That figure represents the companies’ combined market value before any transaction and should not be treated as the valuation of a merged entity.
The companies are also connected through Terafab, their joint semiconductor manufacturing initiative in Texas. Musk has said the project expects to produce its first test chip around May or June 2027, with volume production targeted for the third quarter of 2028.
A merger could bring Tesla’s electric vehicle, energy and robotics businesses together with SpaceX’s launch, satellite internet and government-related operations under one corporate structure. Their overlapping ambitions in artificial intelligence, computing infrastructure and semiconductor manufacturing also form part of the strategic rationale being discussed.
Texas Political Shift Adds Another Layer
Johnson’s warning comes after Democrats won the Texas governor’s race and several other statewide offices in the November 3 election, ending a long period of Republican control of the state’s executive offices.
Governor-elect Gina Hinojosa, who defeated incumbent Greg Abbott, has said her administration intends to maintain Texas’s business-friendly environment while reviewing how the state deals with major companies. She has also said relationships with Musk’s businesses must operate on the state’s terms.
One issue already drawing attention is SpaceX’s proposed acquisition of land around its Starbase facility. Hinojosa said she had asked the executive director of Texas Parks and Wildlife to take no action during the transition on a possible disposition of Boca Chica State Park land.
The land issue is separate from the proposed merger. The Texas Tribune reported on November 12 that SpaceX had outlined details of its plans for the area, while the potential transfer of state park land remained unresolved.
Hinojosa has also pledged to pause new data-center approvals until stronger protections are in place. That is a campaign position, not a blanket state policy already in effect.
The incoming administration’s approach could affect how Texas agencies handle public incentives, land decisions and business dealings involving Musk’s companies. It does not automatically change existing contracts or the regulatory requirements governing a merger.
What the Scrutiny Means for the Proposed Deal
Johnson’s comments add a state-level political and legal dimension to a transaction that still faces unresolved questions over valuation, governance, regulatory approvals and shareholder consent.
The companies have not announced a definitive agreement, and their independent committees have not publicly recommended a transaction. Any eventual deal would need to satisfy the applicable corporate approval requirements and undergo relevant regulatory reviews.
For crypto investors, the potential combination also matters because Tesla and SpaceX together reported holdings of 30,221 Bitcoin as of September 30, 2026.
Tesla’s latest quarterly filing disclosed 11,509 BTC, while SpaceX reported 18,712 BTC in its own third-quarter filing. At a Bitcoin price near $69,000 on November 13, as per CoinGecko data, the combined holdings were worth approximately $2.1 billion.
A merger would not automatically require either company to buy or sell those coins. However, if the holdings remain within the combined company, treasury decisions over the 30,221 BTC would ultimately fall under a single corporate governance structure.
For now, Johnson’s promised scrutiny remains a warning rather than a formal regulatory action. Whether it develops into an investigation or legal challenge will depend on the transaction’s eventual structure and the incoming administration’s actions after taking office in January.
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