WSJ Reports
"Musk Submits Bid to Acquire OpenAI Nonprofit Corporation"
An investor consortium led by Elon Musk, CEO of Tesla, is pushing to acquire the nonprofit corporation controlling OpenAI, the developer of ChatGPT, for $97.4 billion. Sam Altman, CEO of OpenAI, immediately rejected the offer and responded by saying he would acquire Musk’s social networking service X (formerly Twitter) for one-tenth of the amount Musk proposed.
On the 10th (local time), The Wall Street Journal (WSJ) reported that Mark Toberoff, Musk’s attorney, submitted a bid containing these details to the OpenAI board on the same day.
Musk explained the background of the bid in a statement, saying, "It is time for OpenAI to return to focusing on open source and safety, as it once did," and added, "We will make that happen."
Altman immediately expressed his refusal through X. He said, "Thanks, but no thanks," and responded, "If you want, we will buy Twitter for $9.74 billion." Musk had proposed $97.4 billion to acquire the OpenAI nonprofit corporation, and Altman’s offer to buy X at one-tenth the price was a sarcastic reply.
Currently, OpenAI is pushing to transition from a nonprofit corporation to a for-profit corporation. Altman previously raised funds from investors such as Microsoft (MS) to create a for-profit subsidiary. He plans to convert the for-profit subsidiary into a traditional company and spin off the nonprofit corporation. If OpenAI transitions to a for-profit corporation, it can raise large-scale funds through an initial public offering (IPO) and other means, allowing big tech companies to pour more resources into the AI development arms race. The nonprofit corporation of OpenAI will hold shares in the for-profit corporation in the future.
OpenAI currently values the nonprofit corporation at $30 billion. However, Musk’s side argues that the nonprofit corporation should be valued higher and is demanding a competitive bidding process. The bid price Musk proposed to acquire OpenAI this time is more than three times OpenAI’s own valuation. Musk’s side has stated that they can offer an even higher price if necessary. This is analyzed as an attempt to raise the acquisition barrier for the OpenAI nonprofit corporation so that Musk can acquire the company and exert influence over OpenAI.
WSJ reported that Musk’s AI company, xAI, is supporting the acquisition of the OpenAI nonprofit corporation. Several investors, including Baylor Equity Partners, Baron Capital, and Atreides Management, are jointly participating in the investor consortium to acquire OpenAI. If the deal is completed, there is also a possibility that xAI and OpenAI will merge.
Additionally, Musk has filed a lawsuit to block OpenAI’s transition to a for-profit corporation. In response, OpenAI disclosed documents last December showing that Musk had previously agreed to the company’s transition to a for-profit corporation.
Musk and Altman are famously known as archrivals in Silicon Valley. The two co-founded OpenAI in 2015, but Musk left OpenAI in 2018 due to internal conflicts. Last month, when OpenAI, Oracle, and Japan’s SoftBank established the joint venture Stargate and announced plans to invest up to $500 billion in AI infrastructure, Musk poured cold water on the plan, saying, "They actually don’t have the money."
WSJ stated, "Altman’s plan to transition OpenAI to a for-profit corporation has become complicated due to an unsolicited offer," and added, "With Musk’s bid increasing uncertainty about the company’s future, raising billions of dollars in investment for the Stargate project may become even more difficult."
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