A handful of American financial and tech heavyweights are set to make multibillion-dollar bids to buy TikTok after President Joe Biden signed a bill forcing Chinese owners to sell the app. Preparations are underway.
The Wall Street and Silicon Valley players are led by former Treasury Secretary Steven Mnuchin, who has publicly said he wants to buy the addictive app.
Suitors include former Activision Blizzard CEO Bobby Kotick, who has reportedly spoken to OpenAI CEO Sam Altman about a possible offer.
There is also speculation that Bill Ackman, the outspoken head of Pershing Square’s hedge fund, could make a bid. Even “Shark Tank” billionaire Kevin O’Leary said he would “buy” TikTok.
But both face formidable obstacles in wrenching TikTok out of the hands of its Chinese parent company ByteDance and making it a U.S. property.
ByteDance must sell TikTok within a year or ban the app completely.
But China’s Ministry of Commerce last year said it needed to approve the sale of TikTok from parent company ByteDance and said it strongly opposed any sale.
As a result, buyers are unlikely to have access to super-addictive algorithms, technologies that keep users glued to an app for hours on end with videos they want to watch.
That means potential buyers only get the brand name and user base, and have to rebuild the technology and the team that creates it from scratch.
The buyer would also need to raise billions of dollars. TikTok’s valuation has not been made public, but some analysts estimate it could be worth more than $100 billion with the algorithm, but it would be much cheaper without it. ByteDance was valued at $220 billion last year. According to Pitchbook data.
Finally, buyers will have to pass scrutiny by regulators, including the Federal Trade Commission, where Biden’s nominee Lina Khan is leading a crackdown on what it considers monopolistic practices by big tech companies.
That excludes Mark Zuckerberg’s Meta and Tim Cook’s Apple. Apple could afford a $100 billion price tag and have the technical expertise to build new algorithms.
But their acquisition is “too problematic,” an antitrust expert told the Post.
“All of these companies are currently subject to antitrust laws,” Joel Thayer, a principal at consulting and antitrust firm Thayer PLLC, told the Post.
“It would be nearly impossible for a company already under antitrust scrutiny to acquire a company that would give it more power and market share.”
Even the Snaps of Evan Spiegel, whose Snapchat parent company has a market capitalization of just $18 billion, could raise antitrust concerns, he said. It will also be harder for Snap to raise money.
One person close to TikTok told the Post: “No U.S. technology company will be able to acquire TikTok through regulatory authorities.” So if you take a step back, there aren’t that many people who can raise money, convince a board of directors, and start a company. ”
Mr. Mnuchin is the most publicly interested buyer. Announced on CNBC in March Through his fund, Liberty Strategic Capital, he says he is “assembling a group of investors who can buy the app.”
He has decades of experience in banking, raising money for hedge funds and films such as “Avatar,” and then receiving investments.
But recreating the algorithm requires bringing in an entire team of engineers.
If Trump wins, Mnuchin could rejoin the White House as Treasury secretary, which would remove him from the company, people told the Post. Secretary Mnuchin declined to comment.
But Kotick may actually be in the best position to create algorithms and start a technology company, people told the Post.
In March, The Wall Street Journal reported Kotick had been in talks with potential investors, including OpenAI CEO Sam Altman, about finding a consortium to buy the deal.
ChatGPT makers could potentially use TikTok to train their AI models if partners like Kotick can raise the huge amount of funding needed to make the deal a success.
He was the founder and CEO of gaming giant Activision Blizzard, which developed and built apps and games until brokering its $69 billion sale to Microsoft.
He developed relationships with deep-pocketed investors, people familiar with the matter told the Post. Kotick declined to comment.
Ackman has not explicitly said he is interested in TikTok, but Wall Street sources have rumored that he could use a special financial vehicle he created last year as a way to quickly raise money. .
So-called SPARC is a publicly listed financial vehicle that can raise unlimited funds and use it to acquire privately held companies like TikTok.
Ackman’s hedge fund has already committed between $250 million and $3.5 billion as the fund’s anchor investor, but he and his fund could inject more capital as needed. The official added that there is a gender. He declined to comment.
Beltway sources speculate that another potential buyer is Susquehanna founder Jeffrey Yass, who is worth more than $30 billion.
He already owns 15% of ByteDance, and sources say he has the cash to buy more TikTok shares.
These officials said that after Yas’ serious efforts to block the bill, including accusations of bullying members of Congress and meetings with former President Trump, Yas may now resign from selling the bill. He added that there is.
Recent reports even suggest that Susquehanna may have an early version of the algorithm that could give it a technical advantage.
The company is in a good position to persuade boards and governments to get the app because of its deep ties to ByteDance and China, the people added.
A handful of other buyers who lined up to acquire TikTok when President Trump tried to force a sale in 2020 could emerge in the coming months.
Walmart CEO Doug McMillon was in talks to partner with software giant Oracle to acquire TikTok’s U.S. operations.
Although that failed, Mr. McMillon remained in contact with the company. The Post reported that Zhang flew to Arkansas last year to meet with McMillon, prompting speculation that he may still be interested in him.
Oracle founder Larry Ellison hasn’t said anything about acquiring TikTok since 2020, but the company already hosts data from American TikTok users on its servers.
And “Shark Tanks” O’Leary told CNBC Asia in March. He said he would form a consortium to bid between $20 billion and $30 billion for TikTok.
But investors called him “Mr.” Since then, plans for “Wonderful” have taken a turn for the worse, and officials told the newspaper they were skeptical he had the resources to make a bid.
Microsoft, founded by Bill Gates, also tried to buy TikTok in 2020, but people familiar with the matter said it was unlikely to get involved again.
Representatives for Walmart, TikTok and ByteDance did not respond to requests for comment.
It remains to be seen whether it will actually be sold or banned. On Wednesday, TikTok CEO Shou Zi Chew assured users that the app is not “going anywhere” and that he intends to take legal action to prevent it from being banned or sold. . In that case, there is at least a possibility that sales will be delayed.
Other sources said that if elected, Trump, who recently said he opposes banning TikTok, could try to engage in sale negotiations, as he did in 2020, or try to block a forced sale. points out.
