This week, a group of investors led by Elon Musk’s x.AI made a $97.4 billion offer to acquire OpenAI. OpenAI’s CEO, Sam Altman, has rejected this proposal, which threatens to hinder the company’s transition from a nonprofit status, a move that Musk is attempting to obstruct through a lawsuit.
In a court filing on Wednesday, Altman’s lawyers contended that Musk cannot pursue both the acquisition of OpenAI’s assets and simultaneously block its transformation into a for-profit entity. Musk’s representatives responded, claiming they would retract the offer if OpenAI halted its transition from nonprofit status.
Amid these developments, the complete letter of intent from Musk’s consortium seeking to acquire OpenAI was disclosed to the public.
Here are five critical takeaways from that letter and associated legal documents, which provide insight into this complex and contentious situation.
Explicit Deadline Established
Musk’s unsolicited acquisition proposal includes a definite deadline for acceptance: May 10, 2025. There are some exceptions to this deadline, such as if the deal is finalized prior, if both parties agree to terminate discussions, or if OpenAI formally declines the offer in writing.
Despite Altman’s public rebuffs, including a humorous counteroffer of acquiring X for a fraction of the proposed amount, OpenAI’s board has yet to officially reject the proposal, as such boards are typically required to assess acquisition offers legally, even from rival entities.
Cash-Only Deal
Musk’s consortium, which features venture capitalists like Joe Lonsdale from 8VC and SpaceX investor Vy Capital, proposes a total of $97.375 billion to acquire OpenAI, assuring in the letter that the entire transaction would be “paid in cash.”
This all-cash proposal is significant, as Musk has previously employed debt financing, notably borrowing $13 billion from financial institutions for his Twitter acquisition (now X) in 2022. His net worth has risen dramatically since then, now estimated to be around $400 billion, fueled in part by his political alliances.
However, the letter mentions seven investors involved, including Musk’s AI enterprise x.AI, along with unnamed “others,” indicating that Musk is not solely relying on his personal wealth for this purchase.
Comprehensive Access to Records and Employees
Before finalizing such a substantial payment, the prospective buyers demand the opportunity to scrutinize OpenAI’s financial and operational records, as well as to access OpenAI personnel for interviews. This encompasses examining “assets, facilities, equipment, books, and records,” as stated in the letter.
While such due diligence is standard practice for a substantial purchase like this, it also risks allowing Musk’s x.AI, a competitor to OpenAI, access to proprietary internal data. Furthermore, after this review, Musk’s team could have grounds to rescind their offer.
The Bid May Undermine Musk’s Legal Case
Musk’s $97.4 billion offer is at odds with his legal assertions that OpenAI’s assets cannot be “transferred away” for “private again,” as OpenAI’s legal team argued in a recent court document.
OpenAI has cast the proposal as not being a genuine attempt at acquisition but rather “an improper bid to undermine a competitor.” However, Musk’s group maintains that the offer is indeed serious and that the funds would be directed toward advancing OpenAI’s nonprofit mission.
Musk May Revoke Offer If OpenAI Retains Nonprofit Status
According to a court filing on Wednesday, Musk’s legal representatives indicated that he would withdraw his acquisition proposal if OpenAI’s board commits to maintaining its nonprofit status.
The filing posits that Musk’s bid represents a legitimate offer, arguing that the nonprofit should receive fair market value for its assets as would be expected from any independent purchaser.
This stance has led some analysts to suggest that the proposal is intended to inflate the price Altman would need to pay to transition the company privately.
In a statement, a lawyer for OpenAI’s board noted that Musk’s offer “doesn’t set a value for [OpenAI’s] non-profit” and emphasized that the nonprofit is “not for sale.”
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