For $33 billion, Elon Musk’s xAI artificial intelligence business acquired Musk’s X, the social media network formerly known as Twitter. In the billionaire’s swift consolidation of power, this is the most recent action.
Musk controls a number of businesses, including SpaceX and Tesla, which are combined in the all-stock deal announced on Friday. Musk may find it simpler to train Grok, his AI model, as a result.
Musk made the announcement in a post on X, writing, “The combination values xAI at $80bn and X at $33bn ($45B less $12B debt).”
He wrote, “The futures of xAI and X are linked.” “We formally integrate the data, models, computation, distribution, and talent today.”
When approached to comment, neither X nor xAI immediately had a representative accessible. Many aspects of the arrangement remained unclear, including the potential payment to investors, the role of X’s executives in the new business, and the potential for regulatory scrutiny.
According to PP Foresight analyst Paolo Pescatore, “this development feels surprising and somewhat unexpected.” “In a sense, it signifies the end of a chapter in X’s rough story.”
Gil Luria, an analyst with DA Davidson & Co., stated that the $45 billion decision was not a mistake. He can split the value of the xAI company with X additional partners, and it’s $1 billion more than Twitter’s 2022 takeover offer.
The world’s richest individual is Elon Musk. As head of the Department of Government Efficiency, or Doge, he has also expanded his influence in Washington, DC, by supervising the Trump administration’s cost-cutting initiatives. Additionally, that has placed him in a position where he may have an impact on the organisations that oversee his company.
An investor in both xAI and the new company told Reuters that they were not surprised by the deal because they saw it as Musk tightening his control over his own businesses. The donor wished to remain anonymous.
The two businesses have been collaborating closely, Musk assured investors, and the integration would pave the way for even further integration with Grok. He didn’t seek approval from investors.
According to a report, Musk’s xAI venture was established less than two years ago and just raised $10 billion in a funding round, valuing the business at $75 billion.
Musk, 53, and a group made a $97.4 billion offer to acquire OpenAI, the company that creates ChatGPT. OpenAI rejected the offer, stating that the startup was not for sale. In 2015, Musk co-founded OpenAI with CEO Sam Altman.
Musk faces off against the well-known OpenAI platform directly. He has filed a lawsuit against his competitor in a California federal court to prevent them from becoming a for-profit company. Earlier this month, a judge turned down Musk’s request for a preliminary order, which would have stopped the switch.
In Silicon Valley, releasing a lot of AI software has increased competitiveness and investment. To increase efficiency, businesses are searching for methods to integrate software into practically every aspect of their operations.
As the AI race heats up, xAI has been expanding its data hub to train more advanced models. It is reputed to have the largest Colossus supercomputer cluster in the world, located in Memphis, Tennessee.
In February, the most recent iteration of xAI’s robot, Grok-3, was released. The company is trying to compete with OpenAI, which is backed by Microsoft, and DeepSeek, which is based in China. The X platform can be used to spread xAI goods even further and also provide a live feed of users’ thoughts, screenshots, and other information.
Musk made a deal in 2022 to buy X, which was then called Twitter, for $44bn. This ended Twitter’s time as a public company after its IPO in 2013. Musk said that after the deal finished, “the bird is freed.”
After the acquisition, he fired most of the company’s employees, which caused advertisers to leave the site and revenue to drop quickly. As Musk’s power grows in the Trump government, brands have been coming back to X.
A person who knows about the deals says that the seven banks that gave Musk $13bn in loans to buy X kept the debt on their books for two years until they could sell it all at once last month.
Two people familiar with the issue say that this was possible because, among other things, investors became more interested in AI companies and X’s operating performance got better over the last two quarters.
Espen Robak, founder of Pluris Valuation Advisors, a company that values hard-to-sell assets, said that buyers who bought debt from banks will make money after the merger. “The debt is worth more now, even if it’s not paid off in full.”
On a separate note, a US judge turned down Musk’s request to dismiss a case that said he had lied to former Twitter shareholders by not telling them about his first investment in the company for too long.
xz
