\n<\/p>\n
A consortium of investors<\/a> led by Elon Musk\u2019s x.AI offered to buy OpenAI<\/a> for $97.4 billion this week. OpenAI CEO Sam Altman has dismissed the proposal<\/a>, which would gum up<\/a> OpenAI\u2019s planned conversion<\/a> from a nonprofit, something Musk is attempting to block in a lawsuit.<\/a>\u00a0<\/p>\n Altman\u2019s lawyers argued in a Wednesday filing that Musk can\u2019t have it both ways: attempt to buy OpenAI\u2019s assets and also try to stop it from changing its nonprofit status. Musk\u2019s team responded that\u00a0it would withdraw the bid if OpenAI ceased its attempts to convert itself from a nonprofit.<\/a><\/p>\n Meanwhile, as a part of these filings, the full letter of intent<\/a> from Musk\u2019s team to buy OpenAI was made public.<\/p>\n Here are five key details we learned from that letter and other legal filings to shed light on this ongoing, and rather messy, dispute.\u00a0<\/p>\n The unsolicited offer from Musk\u2019s 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.\u00a0<\/p>\n Despite Altman\u2019s public dismissals<\/a>, including a joking counteroffer<\/a> to buy X for a tenth of the price, OpenAI\u2019s board hasn\u2019t formally rejected the offer yet as boards are typically required to legally evaluate such offers, even from competitors.\u00a0<\/p>\n Musk\u2019s consortium<\/a>, which includes VCs like Joe Lonsdale\u2019s 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 \u201cwould be paid in cash.\u201d<\/p>\n This is notable since Musk hasn\u2019t shied away from using debt in the past, borrowing $13 billion<\/a> from banks to buy Twitter (now X) in 2022. His net worth has increased substantially since then, floating around $400 billion<\/a>, according to some estimates, since the election of his new ally Donald Trump.\u00a0<\/p>\n However, the letter names seven investors, including Musk\u2019s AI company x.AI, as well as unnamed \u201cothers,\u201d meaning Musk isn\u2019t using his personal fortune to finance this.<\/p>\n Prior to forking over all that cash, the buyers want to examine OpenAI\u2019s financial and business records, along with access to OpenAI staff for interviews. That means everything from \u201cassets, facilities, equipment, books, and records,\u201d according to the letter<\/a>.<\/p>\n While this is a normal part of due diligence, especially for an offer as big as $97.4 billion, this could also give Musk\u2019s x.AI \u2014 an OpenAI competitor \u2014 access to sensitive internal information. And once they\u2019ve seen it all, their diligence could also provide them with a reason to withdraw their offer.<\/p>\n The $97.4 billion bid to acquire OpenAI contradicts Musk\u2019s legal claims that the startup\u2019s assets can\u2019t be \u201ctransferred away\u201d for \u201cprivate again,\u201d OpenAI lawyers argued in a court filing<\/a> in the lawsuit on Wednesday.\u00a0<\/p>\n OpenAI suggested the offer isn\u2019t serious, but \u201can improper bid to undermine a competitor.\u201d However, Musk\u2019s consortium says<\/a> their offer is indeed \u201cserious\u201d and that its cash would go to OpenAI\u2019s nonprofit to further its mission.<\/p>\n Musk\u2019s legal team says he will drop his bid to acquire OpenAI if the board commits to keeping it as a nonprofit, according to a court filing on Wednesday<\/a>.\u00a0\u00a0<\/p>\n The filing argues that Musk\u2019s buyout offer is a genuine one, stating that the nonprofit should receive fair market value for its assets based on what an independent buyer would pay.\u00a0<\/p>\n This seems to validate what some pundits have alleged: that the offer was intended to drive up <\/a>the price Altman would have to pay to take the company private.<\/p>\n In a statement<\/a>, the lawyer representing OpenAI\u2019s board said Musk\u2019s bid \u201cdoesn\u2019t set a value for [OpenAI\u2019s] non-profit\u201d and that the nonprofit is \u201cnot for sale.\u201d<\/p>\n TechCrunch has an AI-focused newsletter!\u00a0Sign up here<\/a>\u00a0to get it in your inbox every Wednesday<\/em>.<\/p>\n<\/div>\nClear deadline set<\/strong><\/h2>\n
All-cash transaction<\/strong><\/h2>\n
Full access to books and personnel<\/strong><\/h2>\n
The offer could undermine Musk\u2019s lawsuit<\/strong><\/h2>\n
Musk may withdraw if OpenAI stays a nonprofit<\/strong><\/h2>\n