“We have zero intent to purchase the company in whole or in part,” Microsoft spokesperson Frank Shaw told Fortune shortly after this story was published.

Two of the sources told Fortune that Adept has received and signed a term sheet from Microsoft, though the specifics and financial value could not be learned. The deal was not a standard acquisition, according to both sources, one of whom learned about the deal from a high-ranking Adept insider with direct knowledge of the matter.

Microsoft has moved aggressively to transform itself into an AI powerhouse in recent years. The software giant has invested $13 billion in ChatGPT maker OpenAI, and made smaller investments in several other startups including France’s Mistral. In March, it hired the senior leadership team of Inflection AI, a buzzy startup working on AI chatbots.

Adept was founded in 2022 by veterans of OpenAI and Google, including several co-authors of a now famous 2017 research paper that created the kind of neural network architecture, known as a transformer, on which most of the generative AI boom has been built.

While Adept debuted a flashy demo of its product in 2022, it has struggled to gain major commercial customers for its software. In late 2022, two of the Adept cofounders, Ashish Vaswani and Niki Parmar, left to launch their own startup, Essential AI, which has been pursuing a similar idea of using transformers to create AI agents that would be useful to business. In May, The Information reported that Adept was exploring a possible sale or strategic partnership with companies including Meta.

Adept was founded on the idea of using transformers—but not to generate text, as is the case for the large language models (LLMs) that underpin consumer chatbots such as OpenAI’s ChatGPT. Instead, Adept planned to use transformers to create an AI assistant for business, one that could automate any workflow and use any business software to perform tasks. These might range from extracting figures from documents and putting them into a spreadsheet, to then running analysis of financial figures and creating charts and graphs, and then generating a power point sales deck based on the analysis.

Adept, like Inflection, is backed by Silicon Valley VC firm Greylock Partners. Both startups also received investments from Microsoft. According to a March 2023 Forbes report citing anonymous sources, Adept was valued at “at least” $1 billion when it raised $350 million in its Series B round from General Catalyst and Spark Capital.

If Microsoft were to use a similar deal structure with Adept to the one it used for Inflection, that could prove controversial. Microsoft hired Inflection cofounder and CEO Mustafa Suleyman in March, along with most of its research scientists and AI engineers, but did not formally acquire the company. Instead, it paid Inflection’s investors a $650 million fee to license the right to Inflection’s technology. It did so even though Microsoft said it had little interest in the products Inflection had built. A Microsoft spokesperson said at the time that the payment was necessary to make Inflection’s investors’ whole and preempt any lawsuits on the grounds the employees joining Microsoft were somehow stealing Inflection’s trade secrets. Microsoft denied critics who said the structure had another purpose—to avoid having the deal blocked by antitrust regulators.

The U.S. Federal Trade Commission has opened an investigation into the Microsoft-Inflection deal and has drawn the attention of competition authorities in the U.K. and Europe. But the U.K. competition authority decided in May not to take action against Microsoft for an investment it made into the French A.I. startup Mistral.

Update: This story has been updated to include Microsoft’s comment that it has no interest in acquiring Adept.
Correction, June 19: Due to an editing error, an earlier version of this story wrongly stated that the U.K. competition regulator had declined to pursue action against Microsoft over its hiring of staff from Inflection and its licensing payment to Inflection’s investors. The U.K. agency had declined to pursue action against Microsoft related to a different deal in which Microsoft made a small equity investment in French A.I. startup Mistral. It has yet to decide on what, if any, action to take in response to the Inflection deal.