Elon Musk’s February 10, 2025 offer was not a conventional bid for a public company or for ChatGPT. His consortium offered approximately $97.4 billion for OpenAI, Inc.—the nonprofit entity that controlled OpenAI’s operating business—just as OpenAI was trying to reorganize that business as a public benefit corporation (PBC). The offer was rejected, but it created valuation, fiduciary, regulatory and litigation problems that could have delayed or weakened the restructuring.
What Musk was actually trying to buy
“Buy OpenAI” is shorthand that hides the central issue. Before the restructuring, OpenAI had a nonprofit parent, OpenAI, Inc., and a for-profit operating company created in 2019 under a capped-profit model. The nonprofit retained governance control while investors and employees held economic interests in the operating business.
Before restructuring:
OpenAI, Inc. nonprofit
↓ controls
OpenAI capped-profit operating entity
After restructuring:
OpenAI nonprofit
↓ retains control and economic interest
OpenAI Group PBCMusk’s consortium targeted the nonprofit and its assets or controlling position, not merely the commercial product. Those assets could include control rights, intellectual property interests, contracts and the nonprofit’s economic stake. The offer therefore reached the legal mechanism OpenAI needed to complete its recapitalization.
The reported figure was an offer price, not an independently established valuation. Questions remained about financing, liabilities, employee obligations, contract restrictions and which assets could legally be transferred. OpenAI said the nonprofit was not for sale and that the offer did not establish what its charitable assets were worth. TechCrunch’s account of the offer letter describes those disputed details.
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OpenAI wanted to remove the capped-profit limits that made it harder to compete for capital and talent while keeping the nonprofit in control. Its proposal would make the operating business a Delaware PBC, give investors and employees a more conventional ownership instrument, and preserve an economic interest for the mission-focused nonprofit.
A PBC is still a for-profit corporation, but its directors must balance shareholder interests with stated public-benefit purposes. It is not the same thing as a nonprofit. OpenAI’s original explanation is at OpenAI’s structure proposal.
The completed arrangement was more precise than the phrase “nonprofit conversion” suggests: OpenAI’s operating business became OpenAI Group PBC, while the nonprofit remained in control. OpenAI’s current description is at OpenAI’s structure page.
Why a rejected offer could still cause trouble
It could force a valuation and process question
The nonprofit board could not treat a credible outside offer as irrelevant simply because management preferred the restructuring. It would need to document whether the bid was genuine, financeable, legally executable and consistent with the nonprofit’s purposes. Accepting or seriously negotiating could trigger a sale process and delay the recapitalization; rejecting it without careful deliberation could invite claims that the board ignored a potentially superior opportunity.
The $97.4 billion figure also supplied Musk with an argument that the nonprofit’s control and assets had substantial standalone value. Critics could ask whether the nonprofit was receiving fair value in the new PBC, whether it should solicit other bids, and whether investors or executives were receiving benefits that should accrue to the charity. Those are arguments the offer made possible, not findings that the price was accurate.
It could intensify attorneys-general review
California and Delaware officials were already examining whether charitable assets could be transferred or monetized consistently with nonprofit law. An unsolicited multibillion-dollar alternative made valuation, conflicts, board deliberation and mission protection more politically sensitive. Regulators could demand additional disclosures or safeguards before allowing the recapitalization to proceed.
It could affect timing and financing
OpenAI’s new structure was intended to support very large capital raises, infrastructure commitments and competitive equity compensation. Delay could complicate financing rounds, strategic agreements, employee retention and computing purchases. A bid did not need a realistic path to closing to create uncertainty for investors, employees and counterparties.
It could provide litigation leverage
Musk’s proposal gave his lawsuit a concrete valuation and process narrative: the nonprofit’s assets were valuable, an outside buyer was willing to pay for them, and OpenAI should not transfer value to a private commercial structure without proving that the nonprofit was protected. A court could have been asked to examine the transaction before it closed or to require additional procedures.
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The tension with Musk’s lawsuit
Musk’s lawsuit alleged that OpenAI had departed from its founding nonprofit mission and shifted value toward private interests, including Microsoft and OpenAI executives. OpenAI responded that his purchase proposal was inconsistent with that position: if the assets could not be transferred for private gain, why was his consortium offering to buy them?
OpenAI’s characterization was a strategic and legal argument, not an adjudicated conclusion. Musk’s lawyers said the consortium would withdraw the offer if OpenAI’s board preserved the charity’s mission, stopped the for-profit conversion and took the nonprofit’s assets off the market. The condition linked the bid’s practical purpose directly to blocking the restructuring. See TechCrunch’s report and Associated Press coverage.
Who had to make the decision?
Sam Altman could not approve or reject the transaction alone. The overlapping decision-makers included:
- OpenAI, Inc.’s nonprofit board, which held the central governance authority.
- OpenAI management, which designed and negotiated the restructuring.
- Existing capped-profit investors and strategic stakeholders, including Microsoft.
- California’s and Delaware’s attorneys general, whose nonprofit and charitable-asset oversight affected the process.
- The federal court hearing Musk’s lawsuit, which could have imposed an injunction or other remedies.
A nonprofit board’s duties are not identical to those of a public-company board running an ordinary sale. Financial value matters, but control, charitable purpose, conflicts and mission protection matter too. The board was not automatically required to accept the highest headline number.
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| Stakeholder | Potential effect of delay or uncertainty |
|---|---|
| Nonprofit and beneficiaries | More scrutiny of whether charitable assets received fair value and whether mission control was protected. |
| Investors | Uncertainty over ownership rights, valuation, financing timing and the form of their eventual interests. |
| Employees | Possible delay in conventional equity compensation and greater retention risk during a competitive hiring market. |
| Microsoft and other partners | Questions about contracts, governance rights, funding commitments and the continuity of the operating business. |
| Customers and infrastructure partners | Potential uncertainty about capital spending, computing commitments and strategic direction. |
| Regulators | A higher-stakes review of nonprofit law, conflicts, valuation and public-benefit safeguards. |
| xAI and the competitive market | More pressure in Musk’s rivalry with OpenAI, without proving that competitive motives made the bid unlawful. |
What happened to the offer
OpenAI’s board unanimously rejected Musk’s proposal on February 14, 2025, saying it was not in the best interests of the mission and that OpenAI was not for sale. The Associated Press reported the board decision; Axios also covered the rejection.
The bid therefore became a valuation reference point, a litigation weapon, a source of regulatory pressure and a public-relations escalation—not an acquisition. Its practical effect was to make OpenAI explain and defend the restructuring more carefully.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What happened to the restructuring
The offer did not stop the transaction. OpenAI revised the plan so the nonprofit retained control, and the recapitalization closed on October 28, 2025, creating OpenAI Group PBC. Delaware Attorney General Kathy Jennings issued a statement of no objection after the state’s review: Delaware’s statement. California Attorney General Rob Bonta said the state would not oppose the plan after securing concessions concerning charitable assets, safety and OpenAI’s continued California presence: California’s statement.
That outcome is not accurately described as a simple conversion of a nonprofit into a conventional for-profit corporation. The operating business became a PBC, while the nonprofit remained the controlling entity and retained an economic interest.
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What the 2026 lawsuit outcome means
Musk’s related federal lawsuit continued after the bid failed. On May 18, 2026, a federal court rejected his claims, with reporting describing the result as turning on the claims having been filed too late. The Associated Press reported the outcome.
That ruling did not establish that every criticism of OpenAI’s restructuring was resolved on the merits. It did mean Musk did not obtain a judicial reversal of the corporate structure through that case.
Bottom line
Musk’s $97.4 billion proposal failed as a takeover, but it succeeded as a pressure mechanism. By targeting the nonprofit that controlled OpenAI, it forced questions about fair value, charitable fiduciary duties, financing, regulatory review and litigation timing. OpenAI ultimately completed a revised PBC recapitalization with nonprofit control intact, so the bid gummed up the process without defeating it.
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