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OpenAI has argued that Musk’s original $97.4bn offer undermines his legal argument that it shouldn’t go private.
Having made an unsolicited $97.4bn bid to purchase the nonprofit that owns OpenAI, a lawyer for Elon Musk said the Tesla CEO will withdraw the offer if its board of directors agree to stop the planned conversion to a for-profit company.
In a court filing reported by TechCrunch, Musk’s lawyer said the offer is a serious one and the company “must be compensated by what an arms-length buyer will pay for its assets”.
The filing said the bid from the Musk-led consortium would go to the charity in “furtherance of its mission” but added that if the board agrees to “take the ‘for sale’ sign off its assets” and preserve the charity’s mission, Musk will withdraw the bid.
The move follows a response to the bid from OpenAI’s board. In its own court filing, the company said the consortium’s bid to purchase the company undermines a legal attack from Musk in which he argues that OpenAI’s assets must be governed by the nonprofit.
While the board is questioning the hypocrisy of Musk trying to buy a company he said shouldn’t be for sale, it has not yet formally rejected the bid.
In a statement to The New York Times, Marc Toberoff, the lawyer who filed the lawsuit against OpenAI, said the suit is not about who controls OpenAI but about its CEO “Sam Altman and OpenAI’s misconduct”.
Going private
While Musk’s filing does state that the $97.4bn bid is a “serious” one, the latest offer to withdraw the bid does suggest that it’s less about owning the company itself and more about blocking Altman’s path to going private with OpenAI.
Having started as a nonprofit before it transitioned to a “capped-profit” structure in 2019, OpenAI made plans to restructure into a for-profit corporation last year.
While OpenAI’s nonprofit would continue to exist as an entity under this restructure, owning a minority stake, its board will no longer control the company.
However, at present, the nonprofit remains the sole controlling shareholder of the company in its current state, which means it still has a formal fiduciary responsibility to the nonprofit’s charter.
With an offer of almost $100bn from a group of investors that claims it wants to protect the beneficiaries of the nonprofit, the board will have to consider it carefully. Even if the bid is not accepted, it may force the board to rethink its restructuring plans, causing a headache for Altman and his for-profit plans.
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