OpenAI's board has not received Musk's takeover bid, source says

By Krystal Hu, Manuel Ausloos

NEW YORK/PARIS (Reuters) -OpenAI's board of directors has not yet received a formal bid from a consortium led by Elon Musk, a source familiar with the matter told Reuters on Tuesday, adding to the confusion over an unsolicited attempt to take control of the world's most prominent AI company. 

A day after Musk publicized a bid to offer $97.4 billion to buy the nonprofit that controls OpenAI, the two sides were still at odds over what exactly happened to the formal bid.  

Musk’s lawyer, Marc Toberoff, told Reuters that he sent the offer by email on Monday to OpenAI’s outside counsel at Wachtell, Lipton, Rosen & Katz.

A source close to OpenAI’s board said the board and its outside law firms had not received any formal bid from the Musk consortium as of Tuesday afternoon. 

The nonprofit that controls the ChatGPT maker is not for sale, OpenAI CEO Sam Altman told Reuters on Tuesday when asked about Musk's offer to buy it. The offer by the Musk-led consortium came amid the billionaire's fight to block the artificial intelligence startup from transitioning to a for-profit firm.

"I have nothing to say. I mean, it's ridiculous," Altman said on the sidelines of an AI summit in Paris when asked about the offer.

"The company is not for sale. It's another one of his tactics to try to mess with us," Altman said, referring to Musk.

In an internal message to OpenAI employees on Monday, Altman said the board, though it had not officially reviewed the offer, planned to reject it based on the interest of OpenAI’s mission. 

Musk cofounded OpenAI with Altman in 2015 as a nonprofit, but left before the company took off due to a disagreement over the company's direction and funding sources with Altman and other co-founders. In 2023, he launched the competing AI startup, xAI.

Musk, the CEO of Tesla and owner of technology company X, is a close ally of U.S. President Donald Trump. He leads the Department of Government Efficiency, a new arm of the White House tasked with radically shrinking the federal bureaucracy.

OpenAI, in the process of raising $40 billion, is also seeking to transition into a for-profit from a nonprofit entity, which it says is required to secure the capital needed for developing the best AI models. The complicated transition involves putting a price tag on OpenAI's nonprofit control of the for-profit arm.

Delaware Attorney General Kathy Jennings has said she is reviewing OpenAI's proposed changes to ensure the company is "adhering to its specific charitable purposes for the benefit of the public beneficiaries, as opposed to the commercial or private interests of OpenAI’s directors or partners."

Legal experts said Musk's bid complicates the fair value held by OpenAI, particularly regarding charitable assets in its complicated corporate conversion, meaning the price it needs to pay in exchange for the nonprofit to give up control. 

"It does help set a price point for the thinking about the valuation of the nonprofit assets," Robert Weissman, co-president of Public Citizen, the consumer rights watchdog, told Reuters. "If it were to occur as proposed, the regulators have a duty to ensure that if there's a selloff of assets to a for-profit entity, that fair market value is obtained."

(Reporting by Manuel Ausloos and Ingrid Melander in Paris and Krystal Hu in New York; Editing by Alison Williams, Catherine Evans, Nick Zieminski and Matthew Lewis)