Sam Altman says ;No Thank; you to Elon Musk led bid.
One of the world’s wealthiest men alive and the owner of X.com, Elon Musk is spearheading a $97.4 billion bid to acquire OpenAI. Musk’s lawyer, Marc Toberoff submitted the unsolicited bid to OpenAI’s board on Monday. Elon Musk is a former shareholder of OpenAI and sold his stake in the ‘non-profit-turned-for-profit’ company in 2018.
Who is part of Elon Musk’s OpenAI bid?
Elon Musk has the backing of several partners in his bid to take over OpenAI. The bid is backed by xAI as well as several investment firms. The list includes investors such as Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, and Endeavor CEO Ari Emanuel.
"At x.AI, we live by the values I was promised OpenAI would follow. We’ve made Grok open source, and we respect the rights of content creators. It’s time for OpenAI to return to the open-source, safety-focused force for good it once was. We will make sure that happens."
The Information reports that OpenAI’s 10-person board of directors is backing Sam Altman over Elon Musk. The bid comes even as OpenAI is pursuing a $40 billion funding round led by SoftBank. The $40 billion fundraising would make Softbank one of the leading investors in OpenAI potentially even surpassing that of Microsoft.
“It is vital that the charity be fairly compensated for what its leadership is taking away from it: control over the most transformative technology of our time,” said Musk’s attorney, Marc Toberoff, in a statement to Forbes.
Non-profit structure to the rescue?
OpenAI is a hybrid of non-profit and for-profit. The non-profit structure of the company may technically undervalue it in the long run. However, it might also be the saving grace for the company in the present Elon Musk led takeover bid.
The Revlon moment is a situation where the board of directors is legally obligated to prioritize maximizing shareholder value by actively seeking the best possible offer for the company. Elon Musk’s current bid would likely trigger the Revlon moment forcing the company to consider different sale options.
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Implication of rejecting Musk’s offer
The timing of the offer is of utmost importance in this case. OpenAI is seeking to raise funds and is most likely set to receive $40 billion from Softbank. Softbank would pay the amount over the next 12-24 months, which would value OpenAI at around $300 billion.
Ellen Aprill, a nonprofit law scholar at UCLA, said that OpenAI’s leadership may face scrutiny if they reject a significantly higher bid in favor of a lower offer from the for-profit arm, adding, "It’s an enormous complication for the current plan, as per Indiatimes.com. Choosing a lower bid while there is another higher bid on the table would have implications for the board especially when it comes to the for-profit arm of the company.
Elon Musk’s history with OpenAI
Elon Musk co-founded OpenAI in 2015 with Sam Altman as a non-profit company. He left the organization in 2019, selling his stake in the company. There have been massive advancements not only in technology, but also the organization’s valuation ever since. Elon Musk has filed numerous lawsuits against OpenAI accusing them of betraying the original mission by turning into a for-profit company.
Meanwhile, OpenAI released documents showing Elon Musk was supportive of the company turning into a for-profit. The company alleges Elon Musk left OpenAI after failing to acquire a controlling stake.
OpenAi is one of the most innovative and trending companies today with Artifical Intelligence set to define the future. A day after Trump taking office, the U.S. President unveiled a $100 billion AI plan for the United States led by OpenAI, SoftBnka and Oracle.
Elon Musk responded in his usual funny demeanour calling Sam Altman - 'Scam Altman'.
It will be interesting to see whether Elon Musk’s bid is a serious one or not. Regardless, Sam Altman offered to buy Twitter in response. The implications of this bid, even if unsuccessful are high and could potentially shape the future fo the world in more ways than we know.
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