Elon Musk’s Xai artificial intelligence company has purchased Musk’s X, a social media platform formerly known as Twitter, for $330 billion, showcasing the billionaire’s rapid integration strategy.
The deal, announced on Friday, merges two of Musk’s numerous portfolio companies, including Tesla and SpaceX, potentially aiding Musk in training his AI model, Grok.
In a post on X, Musk declared, “The future of Xai and X are intertwined. Today, we have taken a step towards combining data, models, calculation, distribution, and talent.”
There has been no immediate response from X or Xai representatives to requests for comment. Many transaction details remain unknown, including investor compensation, integration of X’s leadership into the new company, and potential regulatory examination.
Paolo Pescatore, an analyst at PP, described the development as “surprising and somewhat unexpected.” He added, “To some extent, it marks the end of a tumultuous chapter for X.”
Gil Luria, an analyst at Da Davidson & Co, noted, “The $45 billion price tag is no coincidence, exceeding Twitter’s 2022 Take-Private Transaction by $1 billion. This move allows Xai investors to share the value of the business with X co-investors.”
Musk, the world’s wealthiest individual, has accumulated significant power in Washington, D.C., overseeing government efficiency and cost-cutting efforts during the Trump administration through Doge. This positions him to potentially influence the institutions overseeing his business dealings.
Xai investors, now part of the combined entity, expressed no surprises over the deal, viewing it as a merger of leadership and management teams within Musk’s own organization. They rejected the proposed name change.
While Musk did not seek investor approval, both companies are working closely together to deepen integration with Grok.
According to reports, Musk’s Xai startup commenced two years ago and secured $10 billion in funding, valuing it at $75 billion.
In February, Musk made a $97.4 billion bid for Openai, a ChatGpt maker consortium, which was subsequently rejected. Musk co-founded Openai in 2015 with CEO Sam Altman.
Musk has been involved in direct competition with Openai, filing a lawsuit in California federal courts to prevent rivals from transitioning from non-profits to commercial entities. A judge recently denied a request for a provisional injunction to block the conversion.
The widespread adoption of AI software has sparked increased investment and competition in Silicon Valley. Companies are seeking ways to integrate software across various business functions for improved efficiency.
As AI competition intensifies, Xai is enhancing its data centers to train more advanced models. Their supercomputer cluster, Colossus, located in Memphis, Tennessee, is touted as the world’s largest.
In February, Xai introduced Grok-3, the latest chatbot iteration, poised to compete with Chinese AI firms Deepseek and Microsoft-backed Openai. The X platform can facilitate the distribution of Xai products and provide real-time user feedback.
In 2022, Musk acquired X and subsequently Twitter for $44 billion, taking the platform private after its 2013 IPO and stating, “the birds will be released” post-acquisition.
Following the acquisition, Musk restructured the company, urged advertisers to leave the platform, resulting in a significant revenue decline. However, as Musk’s influence grew, the brand eventually returned to X.
Sources familiar with the transaction revealed that seven banks provided loans to Musk for the X acquisition, extending their loans to XK for the X deal, maintaining their book debt for two years, due to heightened interest in exposure to AI companies and improved X operational performance.
After the merger, investors who acquired debts from banks are expected to profit, according to Espen Robak, founder of Pluris Aluation Advisors. He stated, “Even if not fully repaid, the debt holds increased value.”
Additionally, a US judge rejected Musk’s attempt to dismiss a lawsuit alleging he misled former Twitter shareholders by delaying disclosure of his initial investment in the company.
Source: www.theguardian.com