How Musk’s $97.4 billion bid can boost the conversion of open for-profit organizations

On Monday, Elon Musk, the wealthiest man in the world It was provided Buy a nonprofit that effectively manages Openai for $97.4 billion. Unsolicited acquisitions are funded by Musk’s AI company, Xai, and a consortium External Investorsaccording to letters sent to the California and Delaware attorney generals.

Openai CEO Sam Altman Immediately rejected the mask bidand took it as an opportunity to publicly dunk it to him.

“Thank you, but I’ll buy Twitter for $9.74 billion if necessary,” Altman wrote. I’ll post it on x It was a few hours after Musk’s Openai offer was reported. Musk owns X, a social network previously known as Twitter. He paid about $44 billion in October 2022.

The two have history. Musk is the co-founder of Openai, and both He and Xai are currently involved in lawsuits that claim Openai is engaged in anti-competitive behavior.

But Altman’s rejection of the $97.4 billion acquisition offer is more complicated than simply saying “no,” according to a corporate governance expert who spoke with TechCrunch.

Stalls Openai’s non-profit conversion

In the background, Openai was founded in 2019 as a nonprofit organization before moving into a “capped for-profit” structure. The nonprofit organization is the sole control shareholder of Capped-Profit Openai Corporation, which holds nonprofit liability.

Openai is currently in the process of restructuring into traditional for-profit companies, especially public benefits companies, in particular public benefits companies, in order to raise more capital. But Musk – who is it? He is famous for having his enemies owned due to legal troubles. – The transition may have stopped and raised prices for Openai’s nonprofit with his bid.

Delaware and CaliforniaThe Attorney General is asking ChatGPT makers for more information about their plans to convert them into for-profit benefits companies. The situation also forces external bids to be seriously considered.

Openai’s board of directors does so I will almost certainly refuse a bidhowever, Musk sets the stage for future legal and regulatory battles. He is already trying to stall the conversion of Openai’s for-profit organization. Through an injunctionfor example. A bid seems to be some sort of alternative offer.

Now, Openai’s board of directors is underdog Openai’s nonprofits by handing out nonprofit assets, including IP from Openai’s own research to insiders (such as Sam Altman) for a sudden discount. You need to demonstrate that there is no.

In an interview with TechCrunch, Stephen Diamond, the lawyer who represented Musk’s enemy in the battle for corporate governance at Tesla, said: “He exploits the nonprofit committee’s fiduciary duties to keep them below their assets. (mask bids) is something Openai must pay attention to.”

Openai is said to be preparing for the funding round The commercial sector is valued at $260 billion. The information reports it Openai’s nonprofit will acquire a 25% stake in Openai’s for-profit organization.

His bid indicates that the mask is at least there One group of investors He is willing to pay a considerable premium to Openai’s nonprofit wing. This will put the board in a small space.

The basis for rejection

Still, just because Musk abandons the eye-opening offer doesn’t mean Openai’s nonprofits have to accept it.

According to David Yoshiffon, a Santa Clara University professor of Corporate Governance Act, the Corporate Governance Act, the Corporate Act gives the current board a great deal of power to protect it from unsolicited purchase bids.

Openai can argue that Musk’s bid is an adversarial attempt at a takeover, given Musk and Altman Not the best friends.

You can also argue that Musk’s offer is unreliable as Openai is already in the midst of the corporate restructuring process.

Another approach Openai can take is to challenge Musk about whether he has the funds or not. As the New York Times points outMusk’s wealth is primarily linked to his Tesla stock. Mask Investment Partner It will need to supply much of the total of $97.4 billion.

According to Scott Curran, a former Clinton Foundation adviser, Openai’s board of directors must fully evaluate mask offers, whether they match the mission of the nonprofit, as well as specific financial goals. There may be. In other words, the mask offer can be compared to an open mission to ensure that “AI systems that are generally smarter than humans) benefit all of humanity.

“When Altman posted that response (to X), it was probably done without legal guidance,” Yosifon said. “It’s not good for regulators to see such boring kneeling tweets.”

Increase the value of your Openai assets

The board could be Altman’s ally. Almost all the directors took part later Altman was temporarily firedafter that Re-employmentby the board of directors of the nonprofit organization in late 2023. Altman himself is an executive.

Without anything else, mask bids may increase the potential market value of Openai nonprofit assets. This could force Openai to raise more capital than originally expected, complicating consultations with existing startup supporters. It could also dilute the value of interests Openai investors hold in for-profit personnel, including key partners such as Microsoft.

It certainly is to anger Altman, who has been working with investors for several months to determine how to compensate nonprofits fairly.

The key points are as follows: Openai’s corporate restructuring plan has become even more complicated.

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