ByteDance investors discuss the possibility of joining forces to buy a majority stake in TikTok
24 Jul, 2020 23:46
source: Singularity Financial
Singularity Financial Hong Kong July 24, 2020 – A small group of ByteDance’s U.S. investors is discussing with the company’s top management the possibility of joining forces to buy a majority stake in TikTok, said people familiar with the situation, as it grows more difficult for the Chinese-owned company to keep control of the fast-growing video app.
The talks appear to be preliminary, and the idea is just one possible scenario ByteDance is examining as it explores ways of dealing with a possible U.S. ban or forced divestiture of the app, the people said.
One path that ByteDance, a privately held company in China, is discussing with its biggest backers is a potential deal that would essentially carve out the app, said the people, who were not authorized to speak publicly.
Under that plan, TikTok would receive new investments from existing ByteDance investors — including the investment firms Sequoia and General Atlantic — with the Chinese company retaining a minority holding, these people said.
TikTok declined to comment on Thursday on a possible sale to US investors, and referred to an announcement earlier this month that ByteDance is weighing changes to its corporate structure. General Atlantic and Sequoia declined to comment.
“We are very confident in the long-term success of TikTok and will make our plans public when we have something to announce,” a TikTok spokesperson said in a statement on Thursday.
TikTok has been trying to distance itself from its Beijing-based owner for months. The Wall Street Journal reported at the time that such changes could include establishing a headquarters for the video app outside of China, or a new management board.
TikTok hired Disney veteran Kevin Mayer as CEO in May. Its main office is in Los Angeles County, and it has offices in London, Paris, Berlin, Dubai, Mumbai, Singapore, Jakarta, Seoul and Tokyo.
But for ByteDance to sell TikTok — the only major social media app created by a Chinese company to gain significant traction globally — would be a big move. And it still might not be enough to alleviate concerns in Washington, where lawmakers and US officials allege TikTok poses a national security threat because it could be used as a spying tool by Beijing. TikTok has denied those allegations.