Elon Musk’s $9.7 billion ‘Offer to Purchase’ for OpenAI Causes Turmoil, Despite Lack of Seriousness

The announcement of the proposed acquisition of OpenAI by Elon Musk and a group of investors worth $9.74 billion, although Sam Altman, CEO of OpenAI, may initially reject it, seems more like a new game by Musk than a genuine intention to purchase. However, because this acquisition offer is officially documented, it is undoubtedly a strategic move aimed at achieving certain results, causing Sam Altman to face difficulties.

Altman later revealed in an interview that Musk’s acquisition offer was intended to slow down OpenAI because he also owns a competing artificial intelligence company. This is a legal tactic aimed at complicating things.

Musk’s offer involves the acquisition of the Non-Profit sector of OpenAI, which owns the For-Profit sector that receives funding from numerous investors, including Microsoft (See more: Understanding the structure of OpenAI, which is unlike typical Tech Companies). Musk’s offer is significant as it “prices” the Non-Profit sector, which the board can accept.

The valuation created a problem for Altman immediately as he is dealing with two important issues: (1) transforming OpenAI into a more profitable entity necessitates converting Non-Profit shares into For-Profit, a matter that has not been resolved with Microsoft, and (2) OpenAI is negotiating with investors to acquire $400 billion on a business valuation of nearly $3 trillion, a figure that will undoubtedly impact the ongoing negotiations as it is a baseline price that people are willing to pay.

This issue will require a decision from the board, and if the offer is rejected, an explanation must be provided as to whether the Non-Profit sector is actually more valuable. Another point of concern is if the board accepts the offer, how will Musk fund it? (Considering his Twitter/X deal worth $4.4 billion, Musk did not pay it all by himself.)

TLDR: Elon Musk’s proposed acquisition of OpenAI involves strategic tactics that may impact the organization’s structure and values, prompting the need for careful consideration and decision-making by the board.