Elon Musk’s artificial intelligence company xAI has acquired social media platform X in an all-stock transaction valuing the former Twitter at $33 billion, or $45 billion including $12 billion in debt. The deal, announced March 28, brings together two of Musk’s major companies while valuing xAI at $80 billion.
“xAI and X’s futures are intertwined,” Musk posted on X. “Today, we officially take the step to combine the data, models, compute, distribution and talent.”
The integration could significantly enhance xAI’s ability to train its chatbot, Grok, by leveraging X’s real-time user data. This consolidation comes as competition intensifies in the AI sector, with xAI working to expand its data center capacity, including its “Colossus” supercomputer cluster in Memphis, which Musk describes as the world’s largest.
Saudi Arabian investor Prince Alwaleed bin Talal, the second-largest investor in both companies, supported the merger, noting the combined value of his investments is expected to reach $4-5 billion.
Analyst Gil Luria of D.A. Davidson pointed out that the $45 billion price tag (including debt) is deliberately $1 billion higher than Musk’s 2022 Twitter acquisition price.
This consolidation occurs amidst Musk’s ongoing rivalry with OpenAI. In February, his $97.4 billion bid for the ChatGPT maker was rejected, and a judge recently denied his request to prevent OpenAI’s conversion to a for-profit business.
The merger also potentially benefits X’s debt holders, as improved operating performance and rising investor interest in AI companies have increased the value of the company’s debt, which banks were able to sell last month after holding it for two years.
