Steven Mnuchin aims buy TikTok to its Chinese parent company, a day after House lawmakers passed a bipartisan bill that would ban the popular social media app in the United States.
The former Secretary of the Treasury of the United States has spoken with possible co-investors on the acquisition of TikTok, he said in an interview with CNBC this Thursday, without giving details. US lawmakers are pushing to ban the app unless its owner, ByteDance, gets rid of it, driven by concerns about the Chinese government’s influence on the American public.
If Mnuchin goes ahead with the purchase, it will be the second high-profile deal he has struck this year, after leading a $1 billion equity investment in troubled commercial real estate lender New York Community Bancorp. a saga that began in 2020, when former President Donald Trump first ordered ByteDance to sell its US assets.
It is unclear whether Mnuchin, who runs a private investment firm that counts Saudi Arabia among its backers, will be able to reach a deal. He business of TikTok In the United States it would be worth between 35 thousand and 40 billion dollarsestimates Bloomberg Intelligence.
Although Mnuchin’s investment firm, Liberty Strategic Capital, raised about $2.5 billion in 2021, the high valuation means he would still need several equity investors to join any potential offering.
“It’s a big business,” Mnuchin said of TikTok in an interview with CNBC. “It should be owned by an American company. There is no way the Chinese would allow an American company to operate something like this in China.” He added that the social media app would be remade in the United States with local technology.
What is the plan for the US to own TikTok?
The U.S. House of Representatives voted overwhelmingly on Wednesday to pass a bill that would effectively eliminate the app in the United States unless it finds a new owner in about six months. Now, the short video app used by 170 million Americans has directed its lobbying efforts to the Senate, where passage is less certain.
TikTok intends to exhaust all legal challenges before considering any type of divestment, people familiar with the matter told Bloomberg.
Representatives for TikTok did not immediately respond to a request for comment.
Mnuchin said that Under his plan, no investor would own more than 10 percent of TikTok, and existing investors would have the option to transfer to the new ownership. While TikTok’s exact ownership structure is unclear, the plan could be a boon for the American investment companies that bought ByteDance.
Institutional investors including Carlyle Group, General Atlantic and Susquehanna International Group own 60 percent of ByteDance; 20 percent is owned by the company’s global workforce; An additional 20 percent is owned by the company’s Chinese co-founder, Zhang Yiming.
Mnuchin believes the Chinese government would support a sale of TikTok as long as there is no technology transfer.
As then-head of the Committee on Foreign Investment in the United States, Mnuchin was instrumental in talks during Trump’s attempt to divest TikTok. At the time, Microsoft Corp. had expressed interest in buying the popular video app and the former Twitter had also explored a possible bid.
Oracle An offer from Microsoft eventually beat out, and Mnuchin helped structure plans for a new company called TikTok Global, with Oracle taking a minority stake in the new entity, which would be headquartered in the United States with an independent, government-approved board. US. The deal fizzled out after Trump lost the 2020 election.
Trump has since changed course on TikTok, saying last week that he opposes the latest ban attempts.
Other buyers
Bobby Kotick, former CEO of Activision Blizzard Inc., also expressed interest in purchasing TikTok, the Wall Street Journal reported. Kotick is looking for partners and at a dinner earlier this month, he floated the idea to several people, including OpenAI CEO Sam Altman.
The list of cash or stock buyers is short. Meta Platforms Inc. and Alphabet Inc. would be hard-pressed to pass antitrust review. Amazon.com Inc. is likely to do so as well, as it is a competitor to TikTok Shop. Oracle, TikTok’s current data protection partner and former suitor, is saddled with debt from a previous deal.
A private, independent TikTok could also work, bought with a cocktail of cash and debt. The Twitter acquisition, which included about a third of the debt in Elon Musk’s $44 billion purchase, is a similar recent example.
