Elon Musk shattered expectations yesterday with the bombshell announcement that his artificial intelligence startup xAI will acquire X (formerly Twitter) in an all-stock merger valued at a staggering $113 billion. The March 29, 2025 deal values xAI at $80 billion and X at $45 billion, including $12 billion in debt. Talk about a plot twist.
The merger represents a dramatic turnaround for Twitter, which Musk purchased for $44 billion in late 2022. Some investors had written off up to 70% of their Twitter stake. Guess who’s laughing now? The transaction effectively sets X’s enterprise value at $33 billion after subtracting its debt load.
For xAI, the valuation jump from $50 billion in late 2024 to $80 billion just months later raises eyebrows. Critics might call it financial gymnastics. Supporters see genius.
The rationale? According to deal documents, xAI and X’s futures are “intertwined.” The merger aims to combine data, models, computing power, distribution, and talent. X brings 600 million active users as a digital town square; xAI brings cutting-edge artificial intelligence. Together, they’ll supposedly reinvent online information delivery. This strategic move aims to prevent Twitter investors from losing their investments while building a more integrated technology ecosystem.
Many shareholders already have stakes in both companies. Sequoia Capital and Fidelity are among the overlapping investors who stand to benefit from this corporate reshuffling.
Sullivan & Cromwell advised on all aspects of the deal, with partners Mike Ringler and Peter Jones leading M&A work. Additional specialists handled financing, tax issues, and regulatory concerns. They earned their fees on this one.
Market watchers note this represents significant consolidation in tech and social media. Regulators will certainly take notice. The valuation surge for xAI could ripple through the entire AI sector, potentially inflating other AI company valuations.
Musk’s enthusiasm to blend parts of his corporate empire isn’t surprising. He’s never been one for conventional business boundaries. Whether this merger proves brilliant or bonkers remains to be seen. One thing’s certain – it’s pure Musk.
