OpenAI board yet to receive Musk’s takeover offer, confusion grows over bid

OpenAI’s board of directors has not yet received a formal acquisition proposal from Elon Musk’s consortium, despite claims from the billionaire’s legal team that the offer was submitted to the company’s legal counsel.

The situation remains unclear, with both sides offering conflicting accounts regarding the status of the bid.

A source familiar with OpenAI’s board confirmed to Reuters on Tuesday that no official bid had been received, adding to the uncertainty surrounding Musk’s $97.4 billion offer to take over the nonprofit entity that oversees the AI powerhouse behind ChatGPT.

Musk’s attorney, Marc Toberoff, told Reuters that the proposal was emailed on Monday to OpenAI’s outside legal firm, Wachtell, Lipton, Rosen & Katz. However, the law firm has yet to comment on whether the bid was forwarded to OpenAI’s board.

According to Toberoff, the offer included a four-page Letter of Intent detailing Musk’s plan to acquire OpenAI’s assets, signed by Musk and other investors, and addressed directly to the board.

He suggested that OpenAI’s CEO, Sam Altman, might have withheld the offer from board members, stating: "Whether Sam Altman chose to provide or withhold this from OpenAI's other board members is outside of our control."

Responding to the takeover attempt, Altman categorically rejected the idea that OpenAI was up for sale.

Speaking at an AI summit in Paris on Tuesday, he dismissed Musk’s offer as "ridiculous" and accused him of trying to create disruption. "The company is not for sale. It's another one of his tactics to try to mess with us," Altman said.

In an internal memo to OpenAI employees, Altman reaffirmed that while the board had not officially reviewed Musk’s offer, it intended to reject it in alignment with the company’s mission.

Musk was a co-founder of OpenAI in 2015 but left the company after disagreements with Altman and other executives over its direction. Since then, he has criticised the company’s transition from a nonprofit to a for-profit model, arguing that such a move compromises its original mission of developing AI for public benefit.

In 2023, Musk launched xAI, a direct competitor to OpenAI, further escalating tensions between the two parties.

Meanwhile, OpenAI is in the process of raising $40 billion to fund the development of more advanced AI models, a move that requires transitioning from its current nonprofit status to a for-profit structure. However, this shift has sparked regulatory scrutiny, particularly regarding the valuation of OpenAI’s nonprofit-controlled assets.

The Delaware Attorney General, Kathy Jennings, has announced a review of OpenAI’s corporate restructuring, ensuring that the company adheres to its charitable mission rather than prioritising private interests.

Legal experts note that Musk’s bid complicates OpenAI’s valuation, as regulators must determine whether a fair market price is being established for the nonprofit’s stake in the for-profit entity. "If there’s a selloff of assets to a for-profit entity, regulators have a duty to ensure that fair market value is obtained," said Robert Weissman, co-president of consumer rights group Public Citizen.