TradingKey – After Elon Musk disclosed that SpaceX (SPCX) and Tesla (TSLA) have each formed special committees to discuss a potential merger, JPMorgan said a combination between the two companies still holds strong strategic rationale.

Regarding the transaction structure, JPMorgan expects that the potential merger could be led by SpaceX in an all-stock deal. The bank noted that SpaceX is currently valued at approximately $2 trillion, up about 10% from its initial public offering, and a higher equity valuation provides favorable conditions for it to execute an acquisition through stock issuance.

According to JPMorgan’s calculations, based on Tesla’s current market value, if a 30% to 35% premium—which the bank noted such transactions…