(Bloomberg) -- A decade ago, Sam Altman, Elon Musk and a group of other founders launched OpenAI as a nonprofit with a mission to build artificial intelligence that benefits humanity. Now, Altman and OpenAI are pushing to restructure as a more conventional for-profit business — and Musk is using every tool at his disposal to stop it.
Musk, who has since launched a rival AI firm, has fired off angry posts about Altman on his social media platform, filed two lawsuits against the company for allegedly straying from its founding principles and asked a court to block the ChatGPT maker’s restructuring efforts. Last week, a judge said she was reluctant to immediately issue such an order in a case pitting “billionaires versus billionaires.”
Following that setback, Musk is shifting his battle with OpenAI from the courtroom to the boardroom. Musk has enlisted a group of wealthy allies for an unsolicited $97.4 billion bid to buy the assets of the nonprofit that controls OpenAI. In a statement, Musk said he hopes to return OpenAI to being “the open-source, safety-focused force for good it once was.”
Musk’s proposal was quickly rebuffed by Altman, who called it a tactic by a competitor to “slow us down” and stressed that the company is “not for sale.” Meanwhile, OpenAI board director Larry Summers told Bloomberg News he has not received any formal outreach from Musk’s side, raising questions about the seriousness of the offer.
Marc Toberoff, a lawyer representing Musk and the other investors, said in a statement Tuesday that he emailed a four-page letter of intent on behalf of the consortium to two members of OpenAI’s outside legal counsel the day before. The letter was addressed to the board of “the charity,” he said, referring to OpenAI’s directors. “Whether Sam Altman chose to provide or withhold this from OpenAI’s other Board members is outside of our control,” Toberoff said. (A person close to OpenAI said that the company's outside counsel has not yet received a letter of intent.)
Assuming the board rejects the offer, as Altman suggested, Musk’s effort will still complicate the company’s complex restructuring effort at a time when it’s in talks with SoftBank Group Corp. to raise a massive new funding round at a valuation as high as $300 billion. OpenAI declined to comment.
Revaluing OpenAI’s Assets
Currently, OpenAI has a for-profit subsidiary that is governed by the nonprofit and its board. As part of the planned corporate shift, the company is expected to pay out a fair value for the nonprofit’s assets. Previously, OpenAI said it will compensate the nonprofit in the form of equity.
Legal experts have said regulators will be watching for what stake the nonprofit receives. With the new bid, Musk may have just raised the floor for how much OpenAI needs to allocate.
“OpenAI’s board is on perfectly solid footing to say no to Musk’s bid,” said Robert Bartlett, a professor at the Stanford Law School and co-director of the Rock Center for Corporate Governance. “But that doesn’t mean they can ignore the ramifications on what the bid means for valuing the assets of OpenAI’s nonprofit.”
OpenAI has previously discussed giving the nonprofit a stake of around 25% in the for-profit company after it restructures, according to a person familiar with the matter, who asked not to be identified discussing private conversations. But talks are ongoing and that number could change. At OpenAI’s current $157 valuation, that stake amount to roughly $40 billion – far less than the amount Musk’s group is offering.
A significant valuation difference could raise questions about whether OpenAI’s board is securing the highest possible amount for its nonprofit’s assets.
“That value cannot be determined by insiders negotiating on both sides of the same table,” Toberoff said in a statement about the bid. “After all, the public is OpenAI Inc.’s beneficiary, and a sweetheart deal between insiders does not serve the public interest.”
However, Bartlett said there are a number of reasons that the board could cite to push back on the idea that Musk is making a “bona fide” offer, including whether he has fully secured the financing to back the bid.
A Hostile Takeover
Asked on Tuesday about the impact that Musk’s unsolicited bid may have on the restructuring plans, Summers said OpenAI will “speak to that, as appropriate, if and when the board actually receives an offer, as distinct from reading media reports.”
It remains unclear how seriously OpenAI needs to evaluate Musk’s takeover offer. As a nonprofit, OpenAI’s board is tasked with performing its “fiduciary duties in furtherance of its mission,” according the company’s website. And that mission is building more advanced AI that’s safe and “broadly beneficial.” The board could reject a bid that it doesn’t think serves that mission.
“In this context, we don’t have a public company. We have a nonprofit board,” Bartlett said. “Their fiduciary obligation is to the charitable mission that established the nonprofit’s existence.”
In the year-plus since Altman was briefly ousted from OpenAI, the board has also been overhauled and is now generally viewed as more aligned with the CEO. In addition to Summers, the board includes Bret Taylor, former co-CEO of Salesforce Inc., and Fidji Simo, CEO of Instacart, among others. Altman rejoined the board last year.
RECOMMENDED FOR YOU
BTS To Release First Album In Four Years In Bid To Reclaim K-Pop Crown
Jul 02, 2025
Snitch Raises Over Rs 340 Crore In Bid To Almost Double Store Count
Jun 02, 2025
OpenAI Acquires Apple Veteran Jony Ive’s AI Startup In $6.5 Billion Deal, Pushes Into Hardware
May 22, 2025
Microsoft Is Key Holdout For OpenAI Restructuring Plan
May 06, 2025
POPULAR