A consortium of buyers led by Elon Musk’s x.AI provided to purchase OpenAI for $97.4 billion final week. OpenAI CEO Sam Altman has dismissed the proposal, which might gum up OpenAI’s deliberate conversion from a non-profit, one thing Musk is making an attempt to dam in a lawsuit.
Altman’s legal professionals argued in a Wednesday submitting that Musk can’t have it each methods: try to purchase OpenAI’s property and likewise attempt to cease it from altering its non-profit standing. Musk’s crew responded that it will withdraw the bid if OpenAI ceased its makes an attempt to transform itself from a non-profit.
Meanwhile, as part of these filings, the complete letter of intent from Musk’s crew to purchase OpenAI was made public.
Here’s 5 key particulars we discovered from that letter and different authorized filings to make clear this ongoing, and moderately messy, dispute.
Clear deadline set
The unsolicited supply from Musk’s group comes with a selected expiration date: May 10, 2025. There are exceptions to the deadline if the deal is finalized beforehand, each side agree to finish discussions, or OpenAI formally rejects the supply in writing.
Despite Altman’s public dismissals, together with a joking counteroffer to purchase X for a tenth of the value, OpenAI’s board hasn’t formally rejected the supply but as boards are usually required to legally consider such affords, even from opponents.
All-cash transaction
Musk’s consortium, which incorporates VCs like Joe Lonsdale’s 8VC and SpaceX investor Vy Capital, is providing precisely $97.375 billion to purchase out OpenAI, and says within the letter 100% of the acquisition value “can be paid in money.”
This is notable since Musk hasn’t shied away from utilizing debt prior to now, borrowing $13 billion from banks to purchase Twitter (now X) in 2022. His internet price has elevated considerably since then, floating round $400 billion, in keeping with some estimates, for the reason that election of his new ally Donald Trump.
However, the letter names seven buyers, together with Musk’s AI firm X.AI in addition to unnamed “others,” that means Musk isn’t utilizing his private fortune to finance this.
Full entry to books and personnel
Prior to forking over all that money, the patrons wish to look at OpenAI’s monetary and enterprise data, together with entry to OpenAI employees for interviews. That means all the pieces from “property, amenities, tools, books, and data,” in keeping with the letter.
While this can be a regular a part of due diligence, particularly for a suggestion as massive as $97.4 billion, this might additionally give Musk’s x.AI – an OpenAI competitor – entry to delicate inside data. And as soon as they’ve seen all of it, their diligence might additionally present them with a cause to withdraw their supply.
The supply might undermine Musk’s lawsuit
The $97.4 billion bid to accumulate OpenAI contradicts Musk’s authorized claims that the startup’s property can’t be “transferred away” for “non-public once more,” OpenAI legal professionals argued in a courtroom submitting within the lawsuit on Wednesday.
OpenAI steered the supply isn’t severe, however “an improper bid to undermine a competitor.” However, Musk’s consortium says their supply is certainly “severe” and that its money would go to OpenAI’s non-profit to additional its mission.
Musk could withdraw if OpenAI stays a non-profit
Musk’s authorized crew says he’ll drop his bid to accumulate OpenAI if the board commits to maintaining it as a non-profit, in keeping with a courtroom submitting on Wednesday.
The submitting argues that Musk’s buyout supply is a real one, stating that the non-profit ought to obtain honest market worth for its property based mostly on what an unbiased purchaser would pay.
This appears to validate what some pundits have alleged: that the supply was supposed to drive up the value Altman must pay to take the corporate non-public.
In a press release, the lawyer representing OpenAI’s board mentioned Musk’s bid “doesn’t set a price for [OpenAI’s] non-profit” and that the non-profit is “not on the market.”
