In a $33 billion deal, Elon Musk’s xAI purchased X, allowing his co-investors in the business, which was formerly known as Twitter, to share in the value of his artificial intelligence startup.
The agreement might also make it easier for xAI to teach Grok, its chatbot.
Musk, who also leads SpaceX and the automaker Tesla, noted in “We formally begin integrating the data, models, computation, distribution, and talent today.” that “X’s future is tied with xAI.” According to him, the value of the combo is “X will cost $33 billion ($12 billion in debt less $45 billion), while xAI will cost $80 billion.“
Requests for comment from X and xAI representatives were not immediately answered. Many details of the acquisition are still unknown, like whether regulatory scrutiny would be present or how X’s leaders would be incorporated into the new company.
The richest guy in the world, Musk leads the Department of Government Efficiency and is a strong ally of US President Donald Trump.
The development was ordered by Prince Alwaleed bin Talal, a Saudi Arabian businessman who owns Kingdom Holding.
He mentioned that the second-largest investors in X and xAI are his enterprises. Gil Luria, an analyst at D.A. Davidson, stated in a post on X that the $45 billion price tag for X when debt was taken into account was not a coincidence.” The meter is running… and the value of our investments is expected to reach between $4 and $5 billion after this deal,” he stated.
An unnamed xAI investor expressed their lack of surprise at the deal, seeing it as Musk strengthening his management and leadership at his own businesses.
Musk informed investors that the two businesses had been working closely together and that the deal will lead to tighter integration with Grok, but he did not ask for their approval.
He mentioned that the second-largest investors in X and xAI are his enterprises. “Our investments should be worth between $4 and $5 billion after this deal… while the meter is running,” he said in an article on X.
Gil Luria, an analyst at D.A. Davidson, stated that the $45 billion price tag for X when debt was taken into account was not an accident. “The figure is $1 billion more than Twitter spent for its buyout in 2022.“
An unnamed xAI investor expressed their lack of surprise at the deal, seeing it as Musk strengthening his management and leadership at his own businesses.
Musk informed investors that the two businesses had been working closely together and that the deal will lead to tighter integration with Grok, but he did not ask for their approval. In February, xAI unveiled Grok-3, the most recent version of its chatbot.
In addition to offering a real-time feed of users’ thoughts, screenshots, and other data, the X platform may be used to further disseminate xAI products.
Musk destroyed the company’s workforce after acquiring Twitter, which caused advertisers to abandon the site and caused revenue to drop off quickly. Brands have recently been going back to X as Musk’s power inside the Trump administration increases.
A source with knowledge of the transactions said that the seven banks that gave Musk $13 billion in loans to purchase X held onto the debt for two years until being able to sell it all at once last month.
Two people with knowledge of the situation said that this was made feasible by a number of circumstances, including X’s improved operating performance over the last two quarters and a spike in investor interest in exposure to AI startups.
Espen Robak, the founder of Pluris Valuation Advisors, a firm that focuses on illiquid assets, stated that investors who purchased the debt from the banks will benefit from the merger. “For sure the debt is worth more now, if not fully paid off.“
In a related development, Musk’s attempt to have a lawsuit alleging that he had deceived former Twitter shareholders by failing to disclose his original stake in the firm sooner was denied by a U.S. judge on Friday.
