TikTok Sale No Easy Feat

Since the US House of Representatives passed a bill in March ordering ByteDance to sell TikTok within six months or see the wildly successful video-hosting service banned in America, discussion has turned to who could acquire it. Or even whether it can be sold at all.

Rep. Mike Gallagher (R-Wis.), chairing the House Select Committee on Competition with China, underscored the knottiness of the problem when he appealed to American investors with a stake in ByteDance to urge reluctant Chinese regulators to allow a sale. Some 60% of ByteDance is owned by non-Chinese entities, including General Atlantic, KKR, Sequoia Capital and Susquehanna International, of whom the latter three have seats on its board.

Gallagher’s comments also suggest that even congressional China hawks do not want to see TikTok banned from the US, where it boasts 170 million enthusiastic users and content creators. In theory, a sale should not be impossible; under pressure from lawmakers, Beijing Kunlun Tech agreed to sell dating app Grindr in 2019, unloading it to San Vicente Acquisition for $608.5 million.

But that deal took nine months to complete—and TikTok is a far bigger and more complex property. Wedbush Securities has valued its US operations at $100 billion, meaning only
a select few potential buyers would be in the running. Wedbush analyst Scott Devitt suggests behemoths—and competitors—Apple, Microsoft, Meta Platforms, Amazon, and Google parent Alphabet as candidates.

However, Joe O’Brien, director at M&A advisory firm FE International, counters that this would raise antitrust concerns. He argues that a consortium of private equity firms could cobble a deal together—without the competitive sensitivities, and in the time allotted. “I would say there’s no single buyer,” he says.

Whether a single concrete proposal will ever be considered remains to be seen, however. The US House bill will take time to find a companion in the Senate, despite considerable support there and President Joe Biden’s backing. And ByteDance has spent record-breaking sums on its Washington lobbying efforts and has said it will go to court to prevent a forced sale. This video clip has only just begun.