A consortium of investors led by Elon Musk’s x.AI offered to buy OpenAI for $97.4 billion final week. OpenAI CEO Sam Altman has dismissed the proposal, which would gum up OpenAI’s planned conversion from a non-profit, one thing Musk is trying 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 belongings and in addition attempt to cease it from altering its non-profit standing. Musk’s crew responded that it could withdraw the bid if OpenAI ceased its attempts to convert itself from a non-profit.
In the meantime, as part of these filings, the total letter of intent from Musk’s crew to purchase OpenAI was made public.
Right here’s 5 key particulars we realized from that letter and different authorized filings to make clear this ongoing, and reasonably messy, dispute.
Clear deadline set
The unsolicited supply from Musk’s group comes with a selected expiration date: Might 10, 2025. There are exceptions to the deadline if the deal is finalized beforehand, either side agree to finish discussions, or OpenAI formally rejects the supply in writing.
Regardless of Altman’s public dismissals, together with a joking counteroffer to purchase X for a tenth of the worth, OpenAI’s board hasn’t formally rejected the supply but as boards are sometimes 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 worth “can be paid in money.”
That is notable since Musk hasn’t shied away from utilizing debt up to now, borrowing $13 billion from banks to purchase Twitter (now X) in 2022. His internet price has elevated considerably since then, floating around $400 billion, in accordance with some estimates, for the reason that election of his new ally Donald Trump.
Nevertheless, the letter names seven buyers, together with Musk’s AI firm X.AI in addition to unnamed “others,” which means Musk isn’t utilizing his private fortune to finance this.
Full entry to books and personnel
Previous to forking over all that money, the patrons need to look at OpenAI’s monetary and enterprise information, together with entry to OpenAI workers for interviews. Meaning the whole lot from “belongings, services, tools, books, and information,” in accordance with the letter.
Whereas this can be a regular a part of due diligence, particularly for a proposal as massive as $97.4 billion, this might additionally give Musk’s x.AI – an OpenAI competitor – entry to delicate inner data. And as soon as they’ve seen all of it, their diligence might additionally present them with a motive 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 belongings can’t be “transferred away” for “personal once more,” OpenAI legal professionals argued in a court filing within the lawsuit on Wednesday.
OpenAI prompt the supply isn’t severe, however “an improper bid to undermine a competitor.” Nevertheless, 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 might 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 conserving it as a non-profit, in accordance with a court filing on Wednesday.
The submitting argues that Musk’s buyout supply is a real one, stating that the non-profit ought to obtain truthful market worth for its belongings based mostly on what an impartial purchaser would pay.
This appears to validate what some pundits have alleged: that the offer was intended to drive up the worth Altman must pay to take the corporate personal.
In a statement, the lawyer representing OpenAI’s board stated Musk’s bid “doesn’t set a worth for [OpenAI’s] non-profit” and that the non-profit is “not on the market.”
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