OpenAI’s board rejects bid from Elon Musk-led group

The feud between Elon Musk and rival Sam Altman took a new turn on Friday when OpenAI’s board rejected a $97.4-billion offer by an investment consortium led by the Tesla chief executive.

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

San Francisco-based OpenAI, a nonprofit startup known for developing ChatGPT, has been seeking to become a for-profit business. It was co-founded by Altman, who is also the chief executive.

On Friday, Taylor said, “Any potential reorganization of OpenAI will strengthen our nonprofit and its mission to ensure AGI benefits all of humanity.”

Musk, an early investor in OpenAI, sued the nonprofit last year, alleging it was departing from its mission to benefit humanity.

The SpaceX chief executive also leads an AI startup, xAI, which competes against OpenAI.

Musk purchased social media company Twitter in 2022 for $44 billion and changed the name to X.

A Musk-led investment consortium on Monday announced its offer to buy OpenAI.

“If Sam Altman and the present OpenAI Inc. Board of Directors are intent on becoming a fully for-profit corporation, it is vital that the charity be compensated for what its leadership is taking away from it: control over the most transformative technology of our time,” said Marc Toberoff, an attorney representing the investors in a statement on Monday.

“It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk said in a statement on Monday. “We will make sure that happens.”

Altman responded on X, saying, “no thank you but we will buy twitter for $9.74 billion if you want.”

In a court filing on Wednesday, Toberoff said that Musk will withdraw his bid if OpenAI’s board is “prepared to preserve the charity’s mission and stipulate to take the ‘for sale’ sign off its assets by halting its conversion.”

The Musk-led investment consortium that bid on OpenAI includes xAI Corp., Baron Capital Group Inc., Valor Management LLC, Atreides Management LP, Vy Fund III L.P. Eight Partners VC LLC and Ari Emanuel’s investment fund, Emanuel Capital Management LLC. Emanuel is chief executive of Beverly Hills-based entertainment and sports company Endeavor.

“They’re just selling it to themselves at a fraction of what Musk has offered, enriching Board members, Altman, [OpenAI Co-founder and President Greg] Brockman and others rather than the charity in a classic self-dealing transaction,” Toberoff said on Friday in an email. “Will someone please explain how that benefits ‘all of humanity’?”