Elon Musk’s SpaceX-Tesla merger math doesn’t add up

Good morning. On Fortune’s radar today:

Elon Musk’s dream merger is a dilutive nightmare for SpaceX shareholders.

ING thinks Britain’s Andy Burnham has a secret plan to hold a snap election.

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Elon Musk’s dream merger is a nightmare for SpaceX shareholders

There’s a problem with the proposed merger of Elon Musk’s SpaceX and Tesla, Fortune’s Shawn Tully writes. The addition to SpaceX’s GAAP profits per share would be minuscule. SpaceX’s bottom line is growing, and Tesla’s is dropping. And thus the deal would prove extremely dilutive for the Starlink provider.

Right now, Tesla’s market cap is $1.52 trillion; tack on a 30% acquisition premium and SpaceX would be out $1.98 trillion. SpaceX’s valuation stands at $2.14 trillion. We’re looking at almost a merger of equals. SpaceX would need to issue the equivalent of 92% of its outstanding shares to capture Tesla. Hence, SpaceX’s share count would zoom from 13.1 billion to 25 billion shares.

SpaceX would be awarding nearly half of its future earnings to Tesla’s selling shareholders. And what’s it getting in return? Tesla booked just $3.28 billion in GAAP net profits over the past four quarters.

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Is Britain’s Andy Burnham secretly planning to hold a snap election? ING thinks so.

Last month, U.K. Prime Minister Andy Burnham went on the record to say he would not call an unscheduled election before 2029. But ING’s James Smith believes that if you ignore what Burnham says and observe what he is doing, it looks very........

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