$Echostar(SATS.US)Elon Musk's SpaceX and xAI are discussing a merger, planning a blockbuster initial public offering later this year.

According to a person familiar with the matter and two recent company documents seen by Reuters, the merger would combine Musk's rockets, Starlink satellites, X social media platform and Grok AI chatbot.

The plan, exclusively reported by Reuters, would give new impetus to SpaceX's efforts to put data centers into orbit. Meanwhile, Musk is vying for dominance in the rapidly escalating AI race with tech giants like Google, Meta and OpenAI.

The world's richest man Musk is CEO of private space company SpaceX and AI company xAI, which controls his social media platform X. He also runs electric car maker Tesla (TSLA.O), tunneling company The Boring Co. and neurotechnology company Neuralink.

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

Under the proposed merger, xAI shares would be converted into SpaceX shares. Two entities have been set up in Nevada to facilitate the deal, the person said.

Reuters could not determine the value, main reasons or potential timing of the deal.

Nevada corporate filings show the entities were established on Jan. 21. One limited liability company lists SpaceX and its CFO Bret Johnsen as managing members, while the other lists Johnsen as the sole executive, filings show.

The filings did not contain more information about the companies' purposes or roles in any transactions.

Johnsen did not respond to Reuters' request for comment.

Because the discussions are confidential, the person, who requested anonymity, said some xAI executives could opt for cash rather than SpaceX stock as part of the deal. However, the person cautioned that a final agreement has not been signed and the timing and structure of the deal remain under discussion.