Elon Musk to Withdraw OpenAI Bid if Board Agrees to Terms

Elon Musk's Offer to Withdraw Bid for OpenAI

Lawyers representing Elon Musk stated in a court document filed on Wednesday that the billionaire intends to retract his $97.4 billion offer to acquire OpenAI’s nonprofit entity.

This withdrawal is contingent upon the ChatGPT maker’s board of directors committing to uphold the organization’s charitable objectives and cease its ongoing transition towards a for-profit model.

Details of the Filing

The document, submitted to the U.S. District Court for the Northern District of California, emphasizes the seriousness of Musk’s offer to purchase OpenAI’s nonprofit.

It asserts that the nonprofit should receive fair market value for its assets, equivalent to what an independent buyer would offer.

Conditions for Withdrawal

According to the filing, a consortium led by Musk has presented a substantial offer to benefit the charity’s mission if its assets are sold.

However, the offer will be rescinded if OpenAI’s board agrees to maintain the nonprofit’s original mission and halt the conversion to a for-profit structure.

Background of the Offer and OpenAI's Response

This filing represents the latest development in a series of events that began on Monday.

Musk, alongside his AI company xAI and a group of investors, proposed a $97.4 billion acquisition of the nonprofit governing OpenAI.

OpenAI’s CEO, Sam Altman, and the board swiftly rejected the unsolicited proposal.

Andy Nussbaum, legal counsel for OpenAI’s board, stated that Musk’s bid failed to accurately value the nonprofit and confirmed that OpenAI is not currently for sale.

Ongoing Legal Dispute

Musk, a co-founder of OpenAI, initiated a lawsuit against the company and Altman last year.

The lawsuit alleges anticompetitive behavior and fraudulent practices.

OpenAI's Structural Changes

Initially established as a nonprofit, OpenAI transitioned to a “capped-profit” structure in 2019.

The nonprofit remains the controlling shareholder of the capped-profit OpenAI corporation, retaining fiduciary responsibility for upholding its original charter.

Currently, OpenAI is undergoing restructuring to become a traditional for-profit public benefit corporation.

Musk’s lawsuit aims to prevent this conversion.

OpenAI's Counterarguments

In a separate filing on Wednesday, OpenAI’s attorneys characterized Musk’s attempt to gain control of the company as an inappropriate effort to weaken a competitor.

They also pointed out a contradiction between Musk’s court position – that asset transfers through restructuring would violate the charitable trust – and his current bid to acquire the company.