OpenAI on Friday turned down a substantial offer from Elon Musk and his consortium of investors to acquire the company’s assets.

What Happened: The board of OpenAI, a leading artificial intelligence company, has rejected a $97.4 billion bid from Musk and his investors, reported the Wall Street Journal. The decision was communicated to Musk’s lawyer in a letter, which stated that the offer was not in the best interests of OpenAI’s mission.

OpenAI’s chairman, Bret Taylor, emphasized that the company is not for sale and the board unanimously turned down Musk’s offer.

On Monday, Musk and his investors submitted an unexpected buyout proposal to OpenAI's board. However, in a court filing Wednesday, his legal team stated that Musk would drop the takeover bid if OpenAI agreed to halt its transition to a for-profit model.

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The board rejected Musk’s offer to withdraw his bid under certain conditions, arguing that it was not a legitimate proposal. Meanwhile, Musk’s attorney, Marc Toberoff, criticized the board’s actions, calling it a “classic self-dealing transaction.”

Why It Matters: Musk’s bid to acquire OpenAI has been a topic of intense speculation. This decision is the latest development in Musk’s ongoing dispute with OpenAI and its CEO, Sam Altman. Musk, who co-founded OpenAI in 2015, has accused the company of prioritizing profit over the technology’s benefits to humanity.

OpenAI is undergoing a structural transition that requires approval from its board of directors and the attorneys general of Delaware and California. The board maintains that Musk's bid is irrelevant to assessing the nonprofit's fair value.

The bid was seen by Sam Altman, the OpenAI CEO, as a move to “slow down” a competitor. In an interview with CNBC on Tuesday, he dismissed the notion that Musk was genuinely interested in acquiring OpenAI.

Meanwhile, Musk’s bid for OpenAI was also viewed as a distraction from Tesla’s challenges. Analysts at Oppenheimer said Musk's bid for OpenAI is a discount to the AI company's Oct. 2024 capital raise and unlikely to lead to any discussion.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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