Elon Musk on Friday announced in a post on X that his artificial intelligence company, xAI, had acquired his social media platform, X, in an all-stock deal.
"The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt)," Musk wrote.
Musk purchased X, the social media platform formerly known as Twitter, for $44 billion — despite the company's board initially being resistant to the Tesla CEO's proposition. Musk also attempted to back out of the purchase, though he faced a $1 billion termination fee if the deal fell through. The sale was ultimately completed in October 2022, and the once publicly traded social media company went private under Musk's ownership.
Since his acquisition of X, Musk has gutted the site's trust and safety team, users have reported spikes in antisemitic content and other hate speech on the platform, and X has been plagued by an exodus of advertisers. Business Insider's Peter Kafka earlier this month reported that the billionaire CEO has been so far unable to completely turn the social media site's trajectory around, but investors have remained interested in the platform — in part due to its financial ties to xAI.
Prior to the news of the acquisition, X held a $6 billion stake in Musk's artificial intelligence company, per Bloomberg.
Musk founded xAI in March 2023 with the goal of "building artificial intelligence to accelerate human scientific discovery." The company, a competitor to OpenAI, has since launched a large language model chatbot called Grok, which is integrated with X and relies, in part, on data generated on the site for training.
"xAI and X's futures are intertwined," Musk continued in his Friday announcement. "Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI's advanced AI capability and expertise with X's massive reach."
He added: "I would like to recognize the hardcore dedication of everyone at xAI and X that has brought us to this point. This is just the beginning."
A spokesperson for X declined to comment on the deal when reached by Business Insider. Representatives for xAI did not immediately respond to a request for comment from BI.
In a post amplifying Musk's announcement, X CEO Linda Yaccarino wrote the future of the two companies "could not be brighter."
The deal between X and xAI isn't the first time Musk has made a similar move between his businesses. In 2016, Tesla acquired SolarCity — a solar panel company founded by Musk's cousins, Peter and Lyndon Rive — for $2.6 billion, taking on $3 billion of Solar City's debts in the process.
SolarCity was turned into Tesla Energy, which then had to contend with a lawsuit from angry shareholders who argued that the takeover amounted to a bailout of SolarCity. Musk ultimately won that lawsuit, avoiding roughly $2 billion in damages.
"I think this deal gets rid of a troublesome company — like SolarCity before, X now — and takes it out of the spotlight," Ann Lipton, a corporate law expert and law professor at Tulane University, told Business Insider. "But xAI is so opaque and so controlled by Musk, and its investors are so close to him, that it's hard to say what kind of downside they see."
Lipton, who has written about Musk's acquisition of Twitter, said Musk has functionally eliminated shareholders who might have otherwise questioned X's valuation and trajectory.
"Now we might ask whether xAI is worth the hype, but at least for now I suspect the X holders are happy with the swap," Lipton said. "Musk makes a troublesome holding less visible and if xAI is over-hyped, well, that's a reckoning that will come later."
