Blackstone mulls small stake in US TikTok spinoff: sources

Blackstone Eyes Minority Stake in TikTok’s US Operations

Private equity firm Blackstone is considering making a small minority investment in TikTok’s US operations, according to sources familiar with the matter. This development comes as the company is discussing joining existing non-Chinese shareholders, led by Susquehanna International Group and General Atlantic, in contributing fresh capital to bid for TikTok’s US business.

TikTok’s US Operations Up for Grabs

TikTok’s US operations have been up in the air since a law, passed last year with overwhelming bipartisan support, required ByteDance to divest the app by January 19 or face a ban on national security grounds. The app briefly went dark in the US in January after the Supreme Court upheld the ban, but flickered back to life days later once US President Donald Trump took office and postponed enforcement of the law to April 5.

Blackstone’s Proposal

Blackstone’s proposal entails spinning off TikTok’s US operations into a separate entity and diluting Chinese ownership in the new business to below the 20 per cent threshold required by US law. This would allow the company to comply with the US law and maintain some control over its operations.

TikTok and Its Investors Remain Mum

TikTok, General Atlantic, and Blackstone have declined to comment on the matter. Susquehanna International Group did not respond to a request seeking comment.

The White House’s Role in the Deal

The White House has been involved in the deal talks to an unprecedented level, effectively playing the role of investment bank. The administration is working on a plan for TikTok that would involve tapping Oracle and some existing ByteDance investors to take control of the app’s operations.

Conclusion

The fate of TikTok’s US operations remains uncertain as the company and its investors negotiate the terms of a deal. Blackstone’s potential minority stake in the US operations could be a crucial step in resolving the ownership dispute and meeting the requirements of the US law. The outcome of these talks will have significant implications for the global social media landscape.

Frequently Asked Questions

Q: What is the current ownership structure of ByteDance?
A: According to legal filings from TikTok last year, global investors own about 58 per cent of ByteDance, while the company’s Chinese founder Zhang Yiming owns 21 per cent, and employees of different nationalities, including about 7,000 Americans, own the remaining 21 per cent.

Q: What is the deadline for ByteDance to divest TikTok’s US operations?
A: The deadline is April 5, 2021, although US President Donald Trump has said he may extend it further.

Q: What is the purpose of the US law requiring ByteDance to divest TikTok’s US operations?
A: The law was passed to address national security concerns surrounding the ownership of TikTok’s US operations by a Chinese company.

Q: Who are the existing non-Chinese shareholders in TikTok’s US operations?
A: The existing non-Chinese shareholders, led by Susquehanna International Group and General Atlantic, are considering contributing fresh capital to bid for TikTok’s US business.