Donald Trump’s former Treasury Secretary considers buying TikTok – 03/14/2024 – Market

Former US Treasury Secretary Steven Mnuchin is weighing the purchase of TikTok from its Chinese parent, ByteDance, a day after House lawmakers approved a bill that could ban the app in the country.

Mnuchin, who worked in the Donald Trump administration, said in an interview with CNBC this Thursday (14) that he spoke to potential investors about acquiring the social network, but did not give further details.

“It’s a great business,” Mnuchin said of TikTok to CNBC. “It should be owned by a US company. Never would the Chinese allow a US company to run something like this in China.”

He added that the social network would be revamped in the country using local technology.

US lawmakers are pushing for a ban on the app unless its owner, ByteDance, divests itself of it. The pressure comes due to concerns about the Chinese government’s influence on American users.

If Mnuchin moves forward with the purchase, it will be the second high-profile deal he has undertaken this year, after leading a $1 billion investment in troubled real estate lender New York Community Bancorp (BYCB).

It would also mark his return to a saga that began in 2020, when former President Donald Trump ordered ByteDance to sell its U.S. assets.

It is unclear whether Mnuchin, who runs a privately held investment firm backed by Saudi Arabia, will be able to reach a deal. TikTok’s U.S. business would be worth $35 billion to $40 billion, Bloomberg Intelligence estimates.

While Mnuchin’s investment firm, Liberty Strategic Capital, raised about $2.5 billion in 2021, that valuation means he would still need multiple investors to join any potential offering.

Other Buyers

Bobby Kotick, former CEO of Activision Blizzard, now owned by Microsoft, also expressed interest in buying TikTok, the Wall Street Journal reported.

Kotick is looking for partners, and at a dinner earlier this month he suggested the idea to several people, including OpenAI CEO Sam Altman.

The list of cash or share buyers is short. Meta and Alphabet would have difficulty passing antitrust review. It’s likely that Amazon will too, as it is a competitor to TikTok Shop, the in-app shopping platform.

Oracle, TikTok’s current data protection partner and former suitor, is saddled with debt from a previous deal.

An independent, private TikTok could also work, acquired with a combination of cash and debt. Twitter’s acquisition, which included about a third of the company’s debt in Elon Musk’s $44 billion purchase, is a similar recent example.

Chamber Measure

On Wednesday (14), the US House passed a bill that could ban the app in the US unless it finds a new owner in about six months. Now the short-video app used by 170 million Americans has turned its lobbying efforts to the Senate, where approval is less certain.

TikTok intends to exhaust all legal challenges before considering any kind of divestment, people familiar with the matter told Bloomberg. TikTok representatives did not respond to a request for comment.

Mnuchin said that under his plan, no investor would own more than 10% of TikTok, and existing investors would have the option to once again join the new company.

While TikTok’s ownership structure is unclear, the plan could be a boon for U.S. investment firms that have invested in ByteDance.

Institutional investors, including Carlyle Group, General Atlantic and Susquehanna International Group, own 60% of ByteDance; 20% is owned by the company’s global workforce; An additional 20% is owned by the company’s Chinese co-founder, Zhang Yiming.

Mnuchin believes the Chinese government would support the sale of TikTok as long as there is no technology transfer.

As then head of the Committee on Foreign Investment in the US, Mnuchin was instrumental in negotiations during Trump’s attempt to break up TikTok.

At the time, Microsoft and the former Twitter had expressed interest in acquiring the application.

Oracle ended up outbidding a bid from Microsoft, and Mnuchin helped structure plans for a new company called TikTok Global, in which Oracle would acquire a minority stake, which would be based in the US with an independent board approved by the US government.

The agreement disappeared after Trump lost the 2020 election. The former president has since backtracked on TikTok, saying last week that he opposes recent attempts at a ban.