OpenAI board rejects Elon Musk’s $97.4 billion buyout offer

Musk’s attempts to challenge OpenAI’s restructuring efforts are not new.

OpenAI’s board of directors has formally rejected an unsolicited $97.4 billion buyout offer from a group of investors led by Elon Musk, reinforcing its stance that the nonprofit overseeing the artificial intelligence company is not for sale.

“OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition,” OpenAI chairman Bret Taylor said in a statement on Friday.

Musk, who co-founded OpenAI in 2015 before launching his own AI startup, xAI, had assembled a consortium of wealthy investors to acquire the nonprofit’s assets. The bid included backing from Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, Joe Lonsdale’s 8VC, and Ari Emanuel’s investment fund. Musk claimed his goal was to restore OpenAI to its original vision as an “open-source, safety-focused force for good.”

The rejection of Musk’s offer comes at a critical juncture for OpenAI, which is currently in talks with SoftBank Group Corp. to raise a fresh round of funding at a potential valuation of $300 billion. As part of its planned corporate restructuring, OpenAI is expected to compensate its nonprofit parent with equity in its for-profit subsidiary.

The decision also marks another chapter in the ongoing conflict between OpenAI and Musk. OpenAI was initially founded as a nonprofit research lab with a for-profit entity, but its restructuring plan aims to facilitate fundraising and increase returns for investors and employees. Musk has criticized this shift, arguing that it deviates from OpenAI’s original mission.

Earlier this week, Musk and his investor group submitted their bid to acquire OpenAI, which could have dramatically altered the AI industry’s landscape. However, OpenAI swiftly dismissed the offer, with CEO Sam Altman responding on X, “No thank you, but we will buy Twitter for $9.74 billion if you want.”

Taylor, who previously led the board of X (formerly Twitter) during Musk’s takeover of that company, highlighted OpenAI’s commitment to its nonprofit mission, stating, “Any potential reorganization of OpenAI will strengthen our nonprofit and its mission to ensure Artificial General Intelligence (AGI) benefits all of humanity.”

Marc Toberoff, an attorney representing Musk’s investor group, criticized OpenAI’s decision, calling it “no surprise” given Altman’s earlier remarks. He also questioned the board’s reasoning, arguing that it had a fiduciary duty to consider the offer in good faith. “They’re just selling it to themselves at a fraction of what Musk has offered,” Toberoff said. “Will someone please explain how that benefits ‘all of humanity?’”

Musk’s attempts to challenge OpenAI’s restructuring efforts are not new. In June 2024, he filed a lawsuit against OpenAI, but later withdrew it after the company released internal emails showing Musk acknowledging the necessity of generating substantial revenue to support its AI ambitions. He later refiled the lawsuit in August, accusing OpenAI of prioritising profit over public good and engaging in racketeering.

OpenAI, in turn, has accused Musk of resentment over his 2018 departure from the company after an unsuccessful attempt to persuade his co-founders to allow Tesla to acquire OpenAI.