ByteDance or The Sale of a Majority Stake in TikTok is in Discussions With US Investors

ByteDance or The Sale of a Majority Stake in TikTok is in Discussions With US Investors

NetEase Technology News, July 22, according to foreign media reports, according to people familiar with the matter, a small number of US investors in ByteDance are discussing with the company’s senior management and intend to jointly acquire short video platform TikTok (TikTok overseas version) Majority stake.

The above-mentioned people familiar with the matter said that the negotiation seems to be still in the preliminary stage, and this idea is just a possible situation that Bytedance is studying, and the company is exploring how to deal with the possible US ban or forced divestment of the application. According to previous reports, Zhang Yiming, the founder and CEO of ByteDance, said that if it is beneficial to TikTok’s future, he is willing to sell the application.

According to people familiar with the matter, according to the ideas under discussion, a small number of Bytedance’s existing shareholders, which may include Sequoia Capital, General Atlantic, SoftBank and New Enterprise Associates, will jointly acquire a majority stake in TikTok, and Bytedance may continue. Holds minority shares. People familiar with the matter said that investors hope that TikTok will be listed at some point in the future so that they can eventually sell their holdings.

However, several issues remain to be resolved, and it is not clear whether all investors support this idea or whether it is driven by a few investors. One of the questions is whether the US government will allow ByteDance to continue to own TikTok even if it is a minority stake. Another question is whether investors want to buy TikTok as a whole, or just buy its US business, or buy the US and Indian businesses together. TikTok has been banned in India, where it is its largest user market.

According to people familiar with the matter, Zhang Yiming and Shen Nanpeng, the founding partner of Sequoia Capital China, were involved in the negotiations. The latter is a member of the Bytedance Board of Directors. According to a person involved in the discussion, if this idea is implemented, TikTok’s current management will continue to stay, including the new CEO Kevin Mayer (Kevin Mayer), who was a Disney executive.

ByteDance has not yet made a final decision. People familiar with the matter said that it would be complicated to strip TikTok from Bytedance, because the company’s different applications share personalized recommendation technology and other engineering resources. However, as the US government puts increasing pressure on Bytedance, it may leave the company with few other options. A spokesperson for Bytedance declined to comment.

ByteDance is already taking measures to increase the number of TikTok employees in the United States, including in advertising sales. Earlier, a TikTok US spokesperson stated that the company plans to hire 10,000 people in the US in the next three years.

ByteDance may also sell TikTok to a US company, but antitrust review of large technology companies will make this transaction difficult. One possibility is the acquisition of a small company like Snap, whose instant messaging application can complement TikTok in many ways. But an investor in Bytedance said the company may not be willing to sell TikTok to global competitors.

In addition, TikTok’s price may be too high for buyers like Snap. TikTok may be worth at least US$20 billion to US$25 billion, and the company internally expects revenue to reach US$1.4 billion this year. However, some investors in Bytedance privately estimated that TikTok’s value is close to 40 billion U.S. dollars, which is higher than Snap’s market value of approximately 37 billion U.S. dollars.

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