(Reuters) – A consortium led by Elon Musk will withdraw its $97.4 billion bid for OpenAI’s non-profit part if the ChatGPT manufacturer abandons intentions to become a for-profit firm, the billionaire’s attorneys said in a court filing Wednesday.
Musk has been attempting to prevent the business he co-founded and subsequently departed from becoming a for-profit company, a step OpenAI believes is critical for it to gain further funding and participate in the AI race.
“If (the) OpenAI board is prepared to preserve the charity’s mission and stipulate to take the ‘for-sale’ sign off its assets by halting conversion, Musk will withdraw the bid,” according to the filing in U.S. District Court, Northern District of California.
In this event, “the charity must be compensated by what an arms-length buyer will pay for its assets.”
Musk’s “serious offer” was intended to enhance the charity’s purpose, according to the document.
Musk owns xAI, a competitive AI business that started in 2023.
OpenAI and Musk, CEO of Tesla and social networking site X, did not return queries for comment.
According to a person familiar with the subject, OpenAI’s board has received the proposal despite first not receiving it 24 hours after Musk’s group claimed to have given it over.
OpenAI CEO Sam Altman said last week that the non-profit that owns the firm was not for sale, calling the proposal “ridiculous.”
The board intends to reject it since its non-profit is not for sale, and the board’s objective is to guarantee that AI helps mankind, according to the source.
OpenAI stated in its own petition with the same court on Wednesday that Musk’s offer to purchase OpenAI contradicts his assertions in court that the startup’s assets cannot be transferred for private gain, calling it “an improper bid to undermine a competitor.”
Musk and Altman co-founded OpenAI as a non-profit in 2015, but he resigned in 2018 before the firm took off owing to disagreements over its direction and funding. Altman subsequently became CEO of OpenAI, establishing a for-profit arm within the company to raise funds from investors like as Microsoft (MSFT.O).
Altman is now working on a proposal to convert the main company into a for-profit entity that will no longer be overseen by its non-profit board. The non-profit will, nevertheless, continue to operate and own an interest in the for-profit corporation. Musk has sued to stop this transfer.
Several experts have stated that the proposal, regardless of the outcome, might hamper OpenAI’s aspirations to transition to a for-profit corporation by establishing a high floor valuation for the non-profit that owns the startup.
Since Reuters first reported on OpenAI’s plans to modify its structure in September, questions have been raised about whether the company would properly transfer its assets to the non-profit arm.
SoftBank Group (9984.T) is in discussions to lead a fundraising round of up to $40 billion in OpenAI at a valuation of $300 billion, including the fresh funds, Reuters reported in January, implying that the non-profit might control a large part in the firm.
