Elon Musk’s unsolicited $97.4 billion bid for the nonprofit that effectively governs OpenAI may not lead to a sale. But it could still change the path of OpenAI’s planned restructuring.
The offer, backed by Musk’s AI company, xAI, and outside investors, arrived as OpenAI is trying to move from its current structure toward a traditional for-profit company, specifically a public benefit corporation. Corporate governance experts told TechCrunch that even a bid OpenAI is expected to reject can create legal, regulatory, and valuation complications.
Why the OpenAI nonprofit matters
OpenAI began as a nonprofit. In 2019, it transitioned to a “capped-profit” structure, but the nonprofit remained central to control. It is the sole controlling shareholder of the capped-profit OpenAI corporation, which still has formal fiduciary responsibility to the nonprofit’s charter.
That structure matters because OpenAI is now trying to restructure again. The goal is to become a traditional for-profit company, specifically a public benefit corporation, as part of an effort to raise much more capital.
Musk’s bid targets the nonprofit layer that effectively governs OpenAI. That makes the offer more than a simple takeover proposal. It lands directly in the middle of a corporate conversion process already being examined by officials in Delaware and California.
Those attorneys general have requested more information from OpenAI about its plans to convert to a for-profit benefit corporation. The offer also means OpenAI’s board must treat the possibility of an outside bid seriously, even if the board is likely to refuse it.
The bid creates a valuation problem
OpenAI’s board will almost certainly reject Musk’s offer, according to the source article. Still, the bid may raise a difficult question: what are the nonprofit’s assets worth?
That issue matters because the nonprofit’s assets include IP from OpenAI’s proprietary research. If those assets are transferred as part of a restructuring, the board may need to show that the nonprofit is not being undersold or handed to insiders at a steep discount.
Stephen Diamond, a lawyer who represented Musk’s opponents in corporate governance battles at Tesla, described the move in direct terms.
“Musk is throwing a spanner into the works,” said Stephen Diamond, a lawyer who represented Musk’s opponents in corporate governance battles at Tesla, in an interview with TechCrunch. “He’s exploiting the fiduciary obligation of the nonprofit board to not undersell the asset. [Musk’s bid] is something OpenAI has to pay attention to.”
OpenAI is said to be preparing for a funding round that would value its for-profit arm at $260 billion. The Information reports that OpenAI’s nonprofit is slated to get a 25% stake in OpenAI’s for-profit.
Musk’s $97.4 billion proposal signals that at least one group of investors is willing to pay a sizable premium for the nonprofit wing. That may give regulators, investors, and critics a concrete number to compare against OpenAI’s own restructuring plan.
Why OpenAI can still say no
A large offer does not automatically require OpenAI’s nonprofit to accept. David Yosifon, a Santa Clara University professor of corporate governance law, told TechCrunch that corporate law gives incumbent boards broad authority to defend against unsolicited takeover bids.
OpenAI could argue that the proposal is a hostile takeover attempt. The source article notes that Musk and OpenAI CEO Sam Altman are not close allies, and that Musk is an OpenAI co-founder currently involved, along with xAI, in a lawsuit alleging that OpenAI engaged in anticompetitive behavior, among other things.
The board could also challenge the credibility of the offer. OpenAI is already in the middle of a corporate restructuring process, and Musk’s wealth is largely tied to his Tesla stock, according to The New York Times as cited by TechCrunch. That would mean Musk’s investment partners would need to provide much of the $97.4 billion total.
Another possible basis for review is mission alignment. Scott Curran, the former general counsel to the Clinton Foundation, said the board may need to assess whether Musk’s offer aligns with the nonprofit’s mission, not only its financial or strategic interests. That mission is “to ensure that artificial general intelligence – AI systems that are generally smarter than humans – benefits all of humanity.”
Altman’s response may not settle the matter
Altman quickly dismissed the offer publicly. In a post on X, he wrote: “no thank you, but we will buy Twitter for $9.74 billion if you want.” Musk owns X, the social network formerly known as Twitter, and paid roughly $44 billion for it in October 2022.
That public reply may play well as a social media jab, but governance experts described the situation as more complicated. Yosifon told TechCrunch that the response was probably made without legal guidance and said it was not good for a regulator to see that kind of dismissive, knee-jerk tweet.
The board’s position also has an internal dimension. Nearly all the directors joined after Altman was briefly fired, then rehired, by the nonprofit’s board in late 2023. Altman himself is also a board member.
That history may make the board likely to side with Altman. But the bid still gives critics and regulators another reason to ask whether the nonprofit is being treated fairly in the conversion.
What changes now
The most immediate effect may be delay and complexity. Musk is already attempting to stall OpenAI’s for-profit conversion via an injunction, and the bid appears to offer another route for challenging the restructuring.
If the offer raises the potential market value of the nonprofit’s assets, OpenAI may need to raise more capital than expected. That could complicate discussions with existing backers and affect the value of stakes held by investors in the for-profit arm, including major partners such as Microsoft.
For OpenAI, the key challenge is no longer only whether it can reject Musk’s offer. It is whether it can persuade regulators and stakeholders that its restructuring fairly compensates the nonprofit while remaining consistent with the nonprofit mission.
The result is a sharper spotlight on OpenAI’s governance. A rejected bid can still matter if it changes the questions the board must answer.