A consortium of investors led by Elon Musk’s x.AI offered to buy OpenAI for $97.4 billion last week. OpenAI CEO Sam Altman has dismissed the proposal, which would gum up OpenAI’s planned conversion from a non-profit, something Musk is attempting to block in a lawsuit.
Altman’s lawyers argued in a Wednesday filing that Musk can’t have it both ways: attempt to buy OpenAI’s assets and also try to stop it from changing its non-profit status. Musk’s team responded that it would withdraw the bid if OpenAI ceased its attempts to convert itself from a non-profit.
Meanwhile, as a part of these filings, the full letter of intent from Musk’s team to buy OpenAI was made public.
Here’s 5 key details we learned from that letter and other legal filings to shed light on this ongoing, and rather messy, dispute.
Clear deadline set
The unsolicited offer from Musk’s group comes with a specific expiration date: May 10, 2025. There are exceptions to the deadline if the deal is finalized beforehand, both sides agree to end discussions, or OpenAI formally rejects the offer in writing.
Despite Altman’s public dismissals, including a joking counteroffer to buy X for a tenth of the price, OpenAI’s board hasn’t formally rejected the offer yet as boards are typically required to legally evaluate such offers, even from competitors.
All-cash transaction
Musk’s consortium, which includes VCs like Joe Lonsdale’s 8VC and SpaceX investor Vy Capital, is offering exactly $97.375 billion to buy out OpenAI, and says in the letter 100% of the purchase price “would be paid in cash.”
This is notable since Musk hasn’t shied away from using debt in the past, borrowing $13 billion from banks to buy Twitter (now X) in 2022. His net worth has increased substantially since then, floating around $400 billion, according to some estimates, since the election of his new ally Donald Trump.
However, the letter names seven investors, including Musk’s AI company X.AI as well as unnamed “others,” meaning Musk isn’t using his personal fortune to finance this.
Full access to books and personnel
Prior to forking over all that cash, the buyers want to examine OpenAI’s financial and business records, along with access to OpenAI staff for interviews. That means everything from “assets, facilities, equipment, books, and records,” according to the letter.
While this is a normal part of due diligence, especially for an offer as big as $97.4 billion, this could also give Musk’s x.AI – an OpenAI competitor – access to sensitive internal information. And once they’ve seen it all, their diligence could also provide them with a reason to withdraw their offer.
The offer could undermine Musk’s lawsuit
The $97.4 billion bid to acquire OpenAI contradicts Musk’s legal claims that the startup’s assets can’t be “transferred away” for “private again,” OpenAI lawyers argued in a court filing in the lawsuit on Wednesday.
OpenAI suggested the offer isn’t serious, but “an improper bid to undermine a competitor.” However, Musk’s consortium says their offer is indeed “serious” and that its cash would go to OpenAI’s non-profit to further its mission.
Musk may withdraw if OpenAI stays a non-profit
Musk’s legal team says he will drop his bid to acquire OpenAI if the board commits to keeping it as a non-profit, according to a court filing on Wednesday.
The filing argues that Musk’s buyout offer is a genuine one, stating that the non-profit should receive fair market value for its assets based on what an independent buyer would pay.
This seems to validate what some pundits have alleged: that the offer was intended to drive up the price Altman would have to pay to take the company private.
In a statement, the lawyer representing OpenAI’s board said Musk’s bid “doesn’t set a value for [OpenAI’s] non-profit” and that the non-profit is “not for sale.”