Summary:
- Elon Musk-led consortium offers $97.4B bid for OpenAI’s nonprofit parent, escalating tensions with CEO Sam Altman over the company’s shift to for-profit status.
- Proposal includes Musk’s xAI and investors like Baron Capital, with potential post-deal merger plans; OpenAI rejected the offer, citing no interest.
- Bid complicates OpenAI’s $40B funding talks with SoftBank and legal battles over Musk’s lawsuit alleging profit-over-safety priorities.
- Analysts question Musk’s financing strategy amid Tesla/X liabilities, while OpenAI’s board faces fiduciary pressure to evaluate competing offers.
A consortium led by Elon Musk has offered $97.4 billion to acquire control of OpenAI’s nonprofit governing body, escalating tensions with CEO Sam Altman over the artificial intelligence pioneer’s controversial transition to a for-profit structure. The bid, confirmed Monday, involves Musk’s xAI venture and investors including Baron Capital Group, with potential plans to merge xAI with OpenAI if successful.
Musk’s Power Play
The Tesla CEO and former OpenAI cofounder intensified his years-long feud with Altman by submitting the unsolicited offer, which complicates OpenAI’s efforts to secure capital through its planned corporate restructuring. Musk’s legal team previously sued OpenAI in August 2024, alleging the company abandoned its original nonprofit mission to benefit humanity. “It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk declared in Monday’s announcement.
Corporate Crossroads
OpenAI’s leadership swiftly rejected the bid, with Altman sarcastically countering on X: “no thank you but we will buy twitter for $9.74 billion if you want.”* The proposed acquisition comes as OpenAI negotiates a $40 billion funding round led by SoftBank Group that would value the ChatGPT creator at $300 billion. Legal experts note the nonprofit’s board faces fiduciary pressure to evaluate Musk’s offer despite its contentious history with the billionaire.
Financial Complexities
The staggering bid raises practical challenges given Musk’s $44 billion acquisition of X (formerly Twitter) in 2022 and Tesla’s recent stock volatility. Analysts suggest Musk might leverage his $165 billion Tesla stake or SpaceX shares as collateral. The offer also threatens to derail OpenAI’s delicate transition from a nonprofit to a capped-profit model designed to attract investors while maintaining governance safeguards.
Broken Partnerships
Musk co-founded OpenAI with Altman in 2015 but left in 2018 over strategic disagreements. His new xAI venture – valued at $40 billion after a June 2024 funding round – positions him as both a competitor and potential suitor. The bid emerges amid Musk’s expanding political influence, including his $250 million campaign to elect Donald Trump and leadership of a White House initiative to streamline federal operations.
The proposed acquisition underscores deepening fractures in Silicon Valley’s AI landscape as Musk seeks to realign OpenAI’s trajectory. With SoftBank’s massive investment hanging in the balance, OpenAI’s board faces unprecedented pressure to reconcile its original mission with the financial realities of developing cutting-edge artificial intelligence.
