OpenAI Board Unanimously Rejects Elon Musk’s $97.4 Billion Buyout Offer

Board Chairman Bret Taylor States OpenAI is “Not for Sale,” Reaffirms Commitment to Nonprofit Mission Amid Musk’s Bid to Disrupt.

SAN FRANCISCO – In a decisive move, OpenAI’s board of directors has unanimously rejected a $97.4 billion buyout offer led by Elon Musk, the tech billionaire and founder of Tesla and SpaceX. The rejection was announced on Friday by OpenAI’s board chairman, Bret Taylor, who emphasized the company’s commitment to its nonprofit mission and its focus on ensuring artificial general intelligence (AGI) benefits all of humanity.

“OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition,” Taylor stated in a company announcement posted on X, the social media platform formerly known as Twitter and owned by Musk.

Elon Musk, who co-founded OpenAI in 2015 alongside CEO Sam Altman and others, filed court documents earlier this week offering to buy the company on the condition that it revert to a nonprofit “charity” model. OpenAI currently operates under a hybrid structure, combining a nonprofit entity with a for-profit subsidiary.

Musk’s offer, which values OpenAI at approximately $30 billion above its current negotiations, appears aimed at disrupting the company’s ongoing efforts to transition to a more traditional for-profit model. This shift is seen as crucial for OpenAI’s ability to attract investment and sustain the massive costs associated with developing and deploying advanced AI technologies.

The relationship between Musk and OpenAI has been strained since his departure from the company in 2018. At the time, OpenAI cited potential conflicts of interest as Tesla increasingly focused on AI development. Musk went on to establish his own AI company, xAI, in early 2023, following OpenAI’s groundbreaking advancements in generative AI, including the launch of ChatGPT.

Chris Lehane, OpenAI’s Chief Global Affairs Officer, dismissed Musk’s offer as a move by a competitor “who has struggled to keep up with the technology and compete with us in the marketplace.”

OpenAI’s hybrid structure allows it to balance its nonprofit mission with the financial demands of AI development. The company’s transition to a for-profit model requires approval from regulatory authorities in California and Delaware, who will scrutinize the valuation of the nonprofit arm as it becomes a shareholder in the new entity.

Current investors are reportedly pushing for a lower valuation to maximize their equity stake in the for-profit subsidiary. Musk’s high valuation offer, however, seems designed to complicate these negotiations and undermine OpenAI’s fundraising efforts.

In its statement, OpenAI reiterated its dedication to ensuring AGI benefits humanity. “Any potential reorganization of OpenAI will strengthen our nonprofit and its mission to ensure AGI benefits all of humanity,” the company said.

The rejection of Musk’s bid underscores OpenAI’s determination to maintain its independence and focus on its long-term goals, even as it navigates the complex financial and regulatory landscape of AI development.

As OpenAI continues to lead the charge in AI innovation, its rejection of Elon Musk’s buyout offer highlights the company’s commitment to its mission and its resolve to remain a key player in the global AI race.