Feb 11 (V7N) - A consortium led by Elon Musk has offered $97.4 billion to buy the nonprofit that controls OpenAI, escalating tensions between Musk and OpenAI CEO Sam Altman. Musk’s bid comes as OpenAI seeks to transition from a nonprofit to a for-profit firm, a move Musk has fiercely opposed. Altman responded to the bid with a sarcastic post on X: "No thank you, but we will buy Twitter for $9.74 billion if you want."

Musk, who cofounded OpenAI in 2015 before leaving, has since launched xAI, a competing AI startup. He has also sued OpenAI and Altman, alleging they violated their original nonprofit mission by prioritizing profit over public good. On Monday, Musk stated his intention to restore OpenAI to its open-source, safety-focused roots. However, Altman has reaffirmed that OpenAI is not for sale.

Musk’s political influence has grown significantly, as he is a close ally of President Donald Trump and leads the Department of Government Efficiency, a White House body focused on shrinking federal bureaucracy. Musk recently criticized a $500 billion AI project led by OpenAI and announced by Trump, further deepening the divide between the billionaire and his former company.

The consortium behind Musk’s bid includes xAI, Baron Capital Group, and Emanuel Capital, among others. According to the Wall Street Journal, xAI could merge with OpenAI if the acquisition goes through. xAI recently raised $6 billion at a $40 billion valuation, indicating that Musk has significant backing for the deal.

OpenAI, valued at $157 billion in its last funding round, is also in talks with SoftBank for a $40 billion investment, which could push its valuation to $300 billion. Experts suggest that Musk’s bid could disrupt OpenAI’s fundraising efforts and complicate its for-profit transition. The OpenAI board may be obligated to consider whether Musk’s offer is financially superior to the SoftBank-backed deal.

Funding such a massive acquisition would be challenging for Musk. While his Tesla stock is worth approximately $165 billion, he has limited leverage after his $44 billion Twitter buyout in 2022. Analysts speculate that Musk could sell Tesla shares, take loans against them, or use his stake in SpaceX as collateral to finance the bid.

Legal and governance experts note that OpenAI’s nonprofit structure adds complexity to the situation. Yale professor Jonathan Macey warns that if OpenAI rejects Musk’s higher bid, it could raise concerns about whether the nonprofit is acting in the best interest of its mission. With OpenAI’s future at stake, its board now faces a pivotal decision between SoftBank’s funding and Musk’s takeover attempt.

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