In an unusual corporate maneuver, Elon Musk has orchestrated a transaction whereby his AI company xAI has acquired his social media platform X (formerly Twitter) in an all-stock deal valuing X at $33 billion.
Musk announced:
xAI and X’s futures are intertwined…Today, we officially take the step to combine the data, models, compute, distribution and talent.
The deal values xAI at $80 billion and X at $33 billion ($45 billion including $12 billion in debt) – creating a combined entity potentially worth more than a whopping $125 billion.
So – How Does One Buy Their Own Company?
The transaction allows Musk to transfer ownership of X to xAI without any actual money changing hands. Since Musk controls both companies, he was able to set the valuations for each entity and structure the deal with minimal external oversight.
What makes this possible is that both X and xAI are privately held companies with overlapping investors, including Saudi Arabian investor Prince Alwaleed bin Talal’s Kingdom Holding, which is the second-largest investor in both companies.
.@Kingdom_KHC (KHC) and my Private Office (PO) are the 2nd largest shareholder after our strategic partner @elonmusk, in both @XAI and @X.
The combined value of the NEW company, XAI Holdings is 125$ billion.
Great work my friend @Elonmusk https://t.co/wlHnQikUuZ
— الوليد بن طلال (@Alwaleed_Talal) March 28, 2025
The deal was represented by a single bank, Morgan Stanley, on both sides – an arrangement that gives Musk considerable flexibility in setting terms.
Imagine a lawyer represent both the buyer and seller in a house sale, except the buyer and seller are both you!
Financial Origami: Folding $44 Billion into $33 Billion
The valuation of X at $33 billion (or $45 billion including debt) is just above the $44 billion Musk paid for Twitter in 2022. This accounting maneuver allows Musk to preserve the investment value for his co-investors while shifting their stakes to the faster-growing xAI.
D.A. Davidson analyst Gil Luria noted the price tag for X including debt was “not a coincidence. It is $1 billion higher than the take-private transaction for Twitter in 2022.”
Meanwhile, xAI’s valuation jumped from $50 billion to $80 billion in this transaction, despite no new external financing – a 60% increase that materialized with the stroke of a pen rather than through a new funding round.
Perfect Timing: Debt Relief and AI Enthusiasm
The timing of this transaction appears strategic. Just last month, the seven banks that extended $13 billion in loans to Musk to buy Twitter in 2022 were finally able to offload the debt, according to sources familiar with the transactions.
“For sure the debt is worth more now, if not fully paid off,” said Espen Robak, founder of Pluris Valuation Advisors, which specializes in illiquid assets.
This debt clearance, combined with growing investor enthusiasm for AI companies and X’s reportedly improved financial performance over recent quarters, created a perfect window for Musk to restructure his holdings.
The AI Strategy: Grok Debuts on X
Beyond the financial restructuring, the merger serves a clear strategic purpose. XAI’s chatbot Grok has been integrated into X’s premium subscription plans, and the company has been using X’s vast pool of user data to train its AI models.
By formally combining the companies, Musk can ensure xAI maintains exclusive access to X’s real-time feed of user content, potentially limiting what information flows to competing AI firms.
The move comes as Musk wages battle against OpenAI, the ChatGPT maker he co-founded but later left. He recently led an unsuccessful $97.4 billion takeover bid for OpenAI and is suing to prevent its conversion from a non-profit to a for-profit structure.
What’s Next? Regulatory Questions and Market Impact
As Musk serves in the Trump administration leading the Department of Government Efficiency, his corporate realm continues to expand.
The merger further consolidates his control across technology sectors – from electric vehicles (Tesla) and space transportation (SpaceX) to social media and artificial intelligence.
However, it does raise questions about potential regulatory scrutiny, though specifics about how X’s leadership would be integrated into the new entity remain unclear.
For now, the deal cements Musk’s growing influence in the AI sector, creating what may become one of the most influential AI-driven entities in the tech industry – one with direct access to hundreds of millions of users through the X platform.
