A consortium led by Elon Musk has submitted a $97.4 billion offer to acquire the nonprofit entity controlling OpenAI. This move marks the latest development in Musk’s ongoing efforts to prevent the artificial intelligence pioneer from transitioning into a for-profit organization.
Musk’s bid is expected to intensify existing tensions with OpenAI CEO Sam Altman, who swiftly responded on X, formerly Twitter, stating, “No thank you, but we will buy Twitter for $9.74 billion if you want.”
Musk, who co-founded OpenAI with Altman in 2015 as a nonprofit, departed the company before its rapid ascent. In 2023, he launched xAI, a competing AI startup. Musk currently serves as CEO of Tesla (TSLA.O) and owns the social media platform X.
OpenAI is seeking to transition to a for-profit model to attract the capital necessary for developing advanced AI technologies. Musk has been openly critical of this shift, arguing that it prioritizes profit over public good. In August, he filed a lawsuit against Altman and other OpenAI leaders, alleging breach of contract and a departure from the organization’s original mission to benefit humanity.
“It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk stated on Monday. “We will make sure that happens.”
Despite Musk’s aggressive bid, Altman informed OpenAI staff that the board has no interest in entertaining the offer, according to a report by The Information. Altman later reaffirmed to Axios that OpenAI is not for sale.
The consortium backing Musk includes xAI, Baron Capital Group, Emanuel Capital, and other investors. Sources indicate that a successful acquisition could lead to a merger between xAI and OpenAI. xAI recently secured $6 billion in funding, valuing the company at $40 billion.
Legal and financial experts suggest that Musk’s offer could significantly disrupt OpenAI’s fundraising efforts and its plans to convert to a for-profit entity.
“This bid certainly throws a wrench in things,” said Jonathan Macey, a Yale Law School professor specializing in corporate governance. “If OpenAI declines the offer in favor of a lesser deal, it raises questions about the fiduciary responsibilities to the nonprofit’s beneficiaries.”
OpenAI’s most recent funding round valued the company at $157 billion, making it one of the world’s most valuable private firms. Reuters previously reported that SoftBank Group (9984.T) is in discussions to lead a funding round of up to $40 billion, potentially valuing OpenAI at $300 billion.
While Musk’s Tesla holdings, valued at approximately $165 billion, provide substantial financial leverage, his borrowing capacity may be limited following his $44 billion acquisition of X in 2022. Analysts suggest he could finance the bid through a combination of selling Tesla shares, leveraging his stake in SpaceX, or securing loans against his existing assets.
“Musk’s offer could complicate OpenAI’s fundraising and conversion to a for-profit structure,” said Gil Luria, an analyst at D.A. Davidson. “Given the credibility of Musk’s backers, OpenAI’s board may have a fiduciary duty to consider the proposal seriously, potentially impacting ongoing negotiations with SoftBank.”
