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OpenAI Tender Offer Proceeds Despite Leadership Shake-Up

2023.12.01

 

Key Takeaways

  • OpenAI’s tender offer continues at a valuation of $86 billion despite recent leadership changes.
  • The tender offer provides liquidity for employees, with Thrive Capital leading the round.

OpenAI Tender Offer Remains Steady

Despite the recent upheaval in its leadership and board composition, OpenAI’s tender offer is progressing as planned. This round will maintain the company’s valuation at approximately $86 billion, unchanged from the figures reported in October. The offer, primarily targeting employee-held shares, is led by Josh Kushner’s Thrive Capital.

 

The tender offer’s continuity comes after a tumultuous period for OpenAI, including the brief ouster of CEO Sam Altman. Altman’s reinstatement has been pivotal in ensuring the tender offer proceeds without alteration. This round is crucial for providing liquidity to employees and is a significant jump from OpenAI’s previous $28 billion valuation in April.

Details of the Tender Offer

The current tender offer, which doesn’t involve issuing new equity, is focused on purchasing existing units primarily from employees. This move allows employees to liquidate their holdings in the company. The offer has been extended until January 5, reflecting the company’s recent internal challenges.

 

OpenAI’s board faced internal disagreements regarding Altman’s approach as CEO. His brief departure caused unrest among investors and employees, leading to significant board changes. The new board structure includes former Salesforce co-CEO Bret Taylor, ex-Treasury Secretary Larry Summers, and Quora CEO Adam D’Angelo. Microsoft, holding a 49% stake in OpenAI, gained a non-voting board observer position but not a director role.

Investor Participation in the Tender Offer

While Thrive Capital leads this round, not all major backers of OpenAI will actively participate in the tender offer. Tiger Global is unlikely to seek a board seat, aligning with the firm’s usual practice. Other major investors include Founders Fund, Sequoia Capital, and Thrive Capital, though Sequoia Capital has not confirmed involvement, and Founders Fund will not participate in this round.

 

The Information and Bloomberg previously reported details of the tender offer. Thrive Capital has expressed its commitment to OpenAI, while Founders Fund and Sequoia Capital have refrained from commenting on their specific involvement in the tender offer.

Implications for OpenAI

This tender offer marks a significant moment for OpenAI, signaling investor confidence and stability despite internal challenges. It also underscores the company’s robust growth trajectory and the high stakes involved in the rapidly evolving AI sector.

 

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