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Microsoft and OpenAI strike non-binding deal to enable restructuring

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Microsoft and OpenAI announced on Thursday that they have signed a non-binding agreement to redefine their partnership, paving the way for OpenAI to restructure into a for-profit company. The move would allow the ChatGPT creator to adopt a more conventional governance model, raise capital more freely, and potentially pursue an eventual IPO.

While details of the new commercial terms were not disclosed, both companies said they are working toward a definitive agreement. The talks mark a major shift in one of the most closely watched partnerships in the AI sector, forged to fuel the global boom in generative AI.

Microsoft has invested $11 billion in OpenAI since 2019 and until recently enjoyed exclusive rights to market OpenAI’s tools through its Azure cloud platform. But the dynamic has shifted: OpenAI has launched its own Stargate data center project, signed $300 billion in contracts with Oracle, and struck another cloud deal with Google, signaling its desire to diversify partnerships and reduce reliance on Microsoft.

For its part, Microsoft wants to preserve access to OpenAI’s technology even if OpenAI claims to reach artificial general intelligence (AGI) — a threshold that under current terms would end the partnership.

OpenAI is targeting a $500 billion valuation, with its nonprofit arm set to receive more than $100 billion, according to chairman Bret Taylor. The conversion still requires approval from attorneys general in California and Delaware, and OpenAI risks losing billions in tied funding if it fails to finalize the transition by year-end.

The evolving relationship underscores the growing competitive tension between the two. Microsoft is developing its own AI models to reduce dependency, while both companies continue to compete in enterprise tools and consumer-facing chatbots.

Wolfspeed Shares Soar 48% as Bankruptcy Court Approves Restructuring Plan

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Wolfspeed (WOLF.N) saw its shares jump 48% to $1.82 on Tuesday after a U.S. bankruptcy court approved the company’s Chapter 11 reorganization plan, paving the way for an exit from bankruptcy in the coming weeks.

Key details of the restructuring

  • Debt reduction: Wolfspeed will slash its debt by about 70% (~$4.6 billion).

  • Lower costs: Annual cash interest payments will be cut by 60%.

  • Timeline: The company expects to formally emerge from bankruptcy within several weeks.

Industry role

Wolfspeed specializes in silicon carbide chips, which are prized for energy efficiency and are widely used in:

  • Electric vehicles (EVs)

  • Solar inverters

  • Industrial power systems

Leadership statement

CEO Robert Feurle said the ruling “clears the path for us to complete our restructuring process in the coming weeks.”

Background

  • Wolfspeed filed for Chapter 11 bankruptcy in June, citing going concern doubts.

  • The restructuring provides the company a financial lifeline amid surging demand for power-efficient chips, especially in EV and renewable energy markets.

Pandora Considers Restructuring Its Struggling China Business Amid Sales Decline

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Danish jewelry giant Pandora is exploring options to restructure its operations in China after years of steep declines in both online and offline sales, according to sources familiar with the matter. The company is reportedly in talks with China-based investment funds and e-commerce partners about potentially licensing its brand and assets, including existing inventory, for a period of five years.

Pandora, the world’s largest jeweler by volume, has faced significant challenges in China, the world’s second-largest economy. Post-pandemic consumer slowdown, a widespread property market crisis, and intense competition from local, digitally savvy brands in the crowded e-commerce space have all taken a toll. Additionally, Chinese consumers have shown a growing preference for gold and higher-value jewelry over Pandora’s offerings.

In a statement to Reuters, Pandora acknowledged the need to reposition its brand in China and said it was working on a turnaround that “will take time.” The company reaffirmed its commitment to the Chinese market but did not comment directly on possible restructuring plans.

Financial filings reveal Pandora’s revenue in China fell nearly 80% to 416 million Danish crowns ($65 million) in 2024, down from 1.97 billion crowns in 2019. The country’s contribution to Pandora’s overall revenue shrank from about 11% to roughly 1% during that period. The business has seen considerable leadership turnover, with three managing directors since 2022. The current managing director, Thomas Knudsen, began in January, shortly before Pandora announced plans to close 50 stores in China this year.

Experts warn that finding a suitable partner or stakeholder for Pandora’s China business may be difficult given the ongoing market headwinds and weak performance. Jonathan Yan, a principal at consulting firm Roland Berger in Shanghai, said financial investors are unlikely to be interested, though e-commerce firms focused on higher-margin brand ownership might consider a deal.

The restructuring model being considered could resemble Gap’s 2022 sale of its China business to Baozun, a leading Chinese e-commerce partner, for $40 million to $50 million. The potential value of a Pandora deal remains unclear.

Sources indicate that Pandora’s e-commerce sales in China have declined more sharply than in physical stores. An acquisition by a local operator with expertise in Chinese e-commerce could offer a better chance at recovery, though any turnaround effort is expected to be costly.

Yan noted, “They will need to burn money and have a very innovative approach, and even then it won’t be easy.”