Owned and managed by TikTok’s parent company ByteDance’s some investors are looking to take over the popular short-video app and have valued it at $50billion.
Beijing-based ByteDance has been considering different operations as the oppression of the United States is increasing to renounce its authority from the app. The app has become a household name among U.S. teenagers.
As reported by Reuters, a U.S. government panel, Committee on Foreign Investment in the United States (CFIUS), whose work is to examine agreements by foreign acquirers for any prospect of the threat to national security. The committee has raised concerns regarding how the TikTok handles the personal data of people.
According to a source the TikTok has earlier already received a proposal from investors like Sequoia and General Atlantic for a majority stake in TikTok. Some other companies and investment firms also have shown interest in the acquisition of TikTok.
Tiktok investors’ bid valuation has been kept at 50 times the forecasted company 2020 total income of around $1 billion. Comparing it with the Snap, the social media company valuation has been kept at $33 billion which is 15 times its forecasted 2020 income.
There has not been any clarity by ByteDance’s founder and CEO, Yiming Zhang on being pleased by the proposal. Sources have said that the dialogue between the ByteDance executives on valuation projections exceeded $50 billion.
In case if an agreement cannot be achieved ByteDance is searching for options to relieve U.S. operations said one of the sources. The details about the cost of the deal and also how will the TikTok, U.S. operations bond with its worldwide operations remains unclear.
There is no certainty that ByteDance will agree to any deal, the sources said. It is pushing ahead with structural changes that will further ringfence the U.S. business of TikTok from its global empire, the sources added. These changes could include a new holding company for TikTok and an independent board, one of the sources said, cautioning that no decision has been made. The company has already separated TikTok operationally from its other apps through dedicated teams.
Suspense on whether TikTok agrees with the deal is still there, the sources said. They are considering the ringfencing the U.S. business of TikTok from its worldwide operations the sources added. It could mean a new holding company for TikTok with an independent board a source added.
The problems for TikTok are not coming to end. Already a bill has been passed by U.S. Senate Committee on Homeland Security and Governmental Affairs that will prevent U.S. federal employees to use Tiktok on government devices. Previously Donald Trump had made his intentions clear on considering the ban of TikTok and other Chinese apps.