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Elon Musk makes official bid to take over OpenAI – Will it be enough?

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Sam Altman says ;No Thank; you to Elon Musk led bid.

Elon Musk, one of the richest individuals globally and proprietor of X.com, has launched a $97.4 billion takeover attempt for OpenAI. In a move made public on Monday, Musk’s legal representative, Marc Toberoff, presented this unsolicited bid to the board of directors at OpenAI. It is important to note that Elon Musk was previously a shareholder in OpenAI but divested his ownership in the company that transitioned from non-profit to for-profit status back in 2018.

Who is part of Elon Musk’s OpenAI bid?

Elon Musk has the support of multiple partners in his attempt to acquire OpenAI. This endeavor is also backed by xAI, along with numerous investment companies. Notable investors involved are Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, and Ari Emanuel, CEO of Endeavor.

Here at x.AI, we embody the values I expected from OpenAI. Just as we’ve made Grok freely available for all, we uphold the rights of content creators. It’s high time for OpenAI to revert to its original open-source and safety-centric mission for the greater good. We are committed to making this transformation a reality.

Elon Musk

According to recent reports, the board of directors at OpenAI, consisting of ten members, has chosen Sam Altman over Elon Musk as their preferred candidate. This decision was made despite the fact that OpenAI is currently seeking a massive $40 billion investment round led by SoftBank. If successful, SoftBank could become one of the primary investors in OpenAI, possibly even surpassing Microsoft’s stake.

According to Musk’s lawyer, Marc Toberoff, it’s crucial that the charity receives appropriate remuneration for the authority over groundbreaking technology of our era that its leadership is withholding from it, as he expressed in a statement to Forbes.

Non-profit structure to the rescue?

OpenAI operates as a blend of both non-profit and profit-oriented entities. In theory, this business model could potentially devalue it over time due to its non-profit nature. Yet, during Elon Musk’s current acquisition attempt, the non-profit aspect might prove beneficial for the company.

In simple terms, the “Revlon Moment” refers to a situation where a company’s board of directors must prioritize maximizing shareholder value by actively seeking the best possible deal if offered, such as Elon Musk’s current bid. This could lead the company to explore various sale options.

Implication of rejecting Musk’s offer

In this particular situation, the exact moment of the offer holds significant weight. OpenAI is planning to gather funds, and it’s highly probable that they will secure approximately $40 billion from Softbank. This money would be distributed over a period of 12 to 24 months, thereby placing an estimated value on OpenAI of around $300 billion.

Ellen Aprill, a scholar specializing in nonprofit law at UCLA, suggested that OpenAI’s leadership could face examination if they opt for a lower bid over a substantially higher one from a for-profit entity. She explained, “This decision adds complexity to the current plan, as reported by Indiatimes.com. Picking a lower offer when there’s a higher one available may pose challenges for the board, particularly in relation to the for-profit sector of the company.

Elon Musk’s history with OpenAI

In 2015, Elon Musk and Sam Altman established OpenAI as a non-profit entity. However, Musk departed from the organization in 2019, transferring his shares to someone else. Since then, there have been significant improvements not only in technology but also in the company’s market value. Now, Elon Musk has filed multiple lawsuits against OpenAI, claiming they deviated from their initial purpose by transitioning into a profit-driven organization.

Simultaneously, OpenAI disclosed papers indicating Elon Musk endorsed the organization transitioning into a profit-making entity. The company asserts that Musk departed from OpenAI following unsuccessful attempts to secure majority ownership.

As a passionate gamer, I can’t help but be thrilled about OpenAI. This cutting-edge company is shaping the future with Artificial Intelligence, and it’s not hard to see why they’re making waves in the tech world today. Just a day after President Trump took office, he announced a groundbreaking $100 billion AI initiative for the U.S., spearheaded by none other than OpenAI, SoftBnka, and Oracle. I can hardly wait to see what these giants will bring to the table!

Elon Musk responded in his usual funny demeanour calling Sam Altman – ‘Scam Altman’.

We’re curious to find out if Elon Musk’s offer is genuine or not. Regardless, Sam Altman has stepped forward with his own bid for Twitter. The potential consequences of this bid, whether it succeeds or fails, are significant and could significantly impact the future in numerous ways that we may not yet fully understand.

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2025-02-11 16:41

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