OpenAI's $300 Billion Restructuring Plan Faces Regulatory Hurdles and Investor Disputes

OpenAI's $300 Billion Public-Benefit Shift Faces Scrutiny As Delaware AG Moves To Hire Investment Bank for Independent Valuation: Report - Microsoft (NASDAQ:MSFT)

OpenAI's ambitious plan to restructure into a $300 billion public-benefit corporation is encountering significant obstacles as state regulators demand independent valuations and major investors clash over equity distribution. What Happened: Delaware's attorney general is hiring an investment bank to independently value the equity OpenAI's nonprofit parent will hold in the new for-profit entity, reported The Wall Street Journal, citing sources. The artificial intelligence company aims to convert its for-profit subsidiary into a public-benefit corporation valued at $300 billion, matching its most recent funding round valuation. The restructuring needs approval from attorneys general in Delaware and California. OpenAI must fairly allocate equity to its nonprofit parent while appeasing private investors. Microsoft MSFT, its largest backer, can block the deal and is disputing its equity share. Both sides have hired investment banks for guidance. Delaware's attorney general did not immediately respond to Benzinga's request for comment. See Also: Tesla's Optimus May Be The First Humanoid Robot To Achieve High Volume And Tech Scale, Says Nvidia CEO Jensen Huang: '... Likely To Be The Next Multi-Trillion Dollar Industry' Why It Matters: OpenAI faces a year-end deadline or risks losing up to $20 billion from SoftBank. It needs the funding to develop new AI models, ship 100 million AI companion devices, and expand global data centers under its Stargate project. The conversion also faces legal challenges from co-founder Elon Musk, who is attempting to block the restructuring through litigation scheduled for trial next year. The restructuring marks OpenAI's transition from its 2015 nonprofit founding to a for-profit model aimed at attracting investment and achieving profitability. OpenAI plans to reduce Microsoft's revenue share from 20% to 10% by 2030. Read Also: AMD Deepens AI Ecosystem With Enosemi Acquisition Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo Courtesy: Meir Chaimowitz on Shutterstock.com MSFTMicrosoft Corp$460.560.70%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum70.55Growth51.80Quality34.17Value13.75Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

OpenAI seeks $300 billion valuation in public-benefit corporation transition - WSJ By Investing.com

Investing.com -- OpenAI, a leading artificial intelligence startup, is in the process of transitioning into a public-benefit corporation, with the aim of attracting more investors and potentially going public. The company's ambitions are not without their challenges, as it needs to secure state approvals, a process that has proven to be complex. The Attorney General of Delaware is currently hiring an investment bank. The bank's role will be to independently assess the equity value that OpenAI's nonprofit parent will hold in the new for-profit entity, as per the Wall Street Journal, citing sources familiar with the situation. OpenAI's goal is to convert its for-profit subsidiary into a public-benefit corporation, a move that would value the company at $300 billion, matching the valuation from its most recent funding round. This conversion is a crucial part of OpenAI's strategy to increase its cash flow and become profitable. However, before the restructuring can take place, OpenAI needs to establish a method for equity distribution within the new entity. The startup must demonstrate to state regulators that the nonprofit parent will receive fair compensation. It also needs to satisfy its private investors, who are vying for the largest possible stake in the new company. Both the Delaware and California Attorneys General must approve OpenAI's conversion. The process of securing these approvals is ongoing, and the outcome will play a major role in OpenAI's future trajectory.