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Musk's lawyer urges auction to decide fair value of

OpenAI's

charitable assets

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OpenAI says valuation is decided by financial advisors as

it

works to remove non-profit control

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Court to hear on Musk's preliminary injunction on the case

Jan 9 (Reuters) - A lawyer for billionaire Elon Musk has

asked attorney generals in the states of California and Delaware

to push OpenAI to auction a major stake in its business to

decide fair value of its charitable asset during its corporate

restructuring, sources familiar with the matter told Reuters on

Thursday.

Musk's attorney Marc Toberoff sent a letter to the states'

top law officers on Tuesday in which he argued they should

provide a process for competitive bidding to determine fair

market value of OpenAI's charitable assets to "protect the

public's beneficial interest," as the startup is working on

removing the control of its non-profit, according to the

sources.

"Elon is engaging in lawfare. We remain focused on our

mission and work," OpenAI spokesperson said in a statement. The

startup previously said the valuation of its charitable assets

will be determined by independent financial advisors. Financial

Times reported the letter earlier in the day.

Sam Altman co-founded OpenAI alongside Musk and others, and

became one of the technology world's biggest names after the

2022 launch of the artificial intelligence tool ChatGPT. Backed

by Microsoft ( MSFT ), OpenAI was valued at $157 billion in

October after raising $6.6 billion from investors.

Reuters first reported the ChatGPT maker's plan to revamp its

corporate structure so its for-profit business would be

independent from non-profit control in September. The company

outlined the plan in detail late December, saying it would

create a public benefit corporation to make it easier to "raise

more capital than we'd imagined" and the plan would result in

"one of the best resourced non-profits in history."

Musk, who owns AI startup xAI, is suing OpenAI in courts in

an effort to block OpenAI's conversion, which it had argued as a

departure of the mission he funded the company on. The court is

likely to rule on the preliminary injunction Musk's lawyers had

applied for later this month.

Delaware Attorney General Kathy Jennings weighed in on the

case by sending the court an amicus brief on Dec. 29, stating

she is currently reviewing OpenAI's proposed changes.

"That Delaware is on record asserting that it is closely

monitoring the situation should definitely undercut a judge's

willingness to enjoin a transaction Musk and Encode characterize

as dangerous, unwise, or the product of fiduciary violations,"

Darryll Jones, Professor of Law at Florida A&M University wrote

in a blog. Encode is an AI safety non-profit that joined Musk's

efforts to block OpenAI's for-profit transition.

California Attorney General Rob Bonta, who also has

jurisdiction, has not commented on the case, despite a letter

from Meta urging him to block it.