Elon Musk reportedly formed three holding companies in Delaware, all with variations of the name “X Holdings,” according to a new report from Bloomberg. The establishment of one of the companies is being used to fund Musk’s Twitter purchase, should it occur.
The filings don’t explicitly mention it, but they also hint toward the potential that an umbrella company for his multiple entities could be in the works, as Musk has entertained the idea in the past.
Musk, who hinted in 2020 that combining Tesla, SpaceX, Neuralink, and the Boring Company into one entity was a good idea, formed three new companies in Delaware, according to filings with the SEC recovered by Bloomberg. The filings revealed Musk and investment partners plan to ultimately put money into one of the entities to fund the potential purchase of Twitter, while a subsidiary would merge with the social media platform.
— Elon Musk (@elonmusk) December 23, 2020
Musk, who has received over $46 billion in financial commitments for the Twitter acquisition, did not clarify in the documents if the holding companies would be associated with Tesla, SpaceX, or any of Musk’s other ventures, despite the past hints toward forming a parent company. Musk owns X.com after he bought the domain from PayPal in 2017.
An umbrella company would be advantageous for Musk and all of his companies’ investors, simply because all of them share a common goal: pushing humanity forward. From a financial aspect, it may be advantageous for Musk to combine all of his separate companies under a single “umbrella company,” which is what Alphabet did with Google when it restructured itself in 2015.
However, there are some disadvantages, especially with each company’s investor base. Bloomberg mentioned Musk’s comments regarding the idea in an interview with TED Head Chris Anderson, where Musk said creating a single holding company to control each of his entities would be “tricky” because the “investor base of Tesla and SpaceX, and certainly Boring Co. and Neuralink, are quite different,” which could lead to issues later on. Musk’s idea behind investing has always been to put money into companies you believe in, and that may not necessarily align if one master company was responsible for a few companies all in different sectors.
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