TikTok has been criticized by US lawmakers on grounds of national security.
Twitter Inc has contacted Chinese TikTok owner ByteDance to express interest in acquiring the video-sharing app’s US operations, two people familiar with the matter told Reuters, as experts doubted Twitter’s ability. to set up funding for a potential deal.
It is far from certain that Twitter would be able to outbid Microsoft Corp and strike such a transformative deal within the 45 days US President Donald Trump gave ByteDance to accept a sale, the sources said on Saturday.
The news that Twitter and TikTok are in preliminary talks and that Microsoft is still seen as the leader in tenders for the app’s U.S. operations was reported earlier by the Wall Street Journal.
Twitter has a market capitalization of nearly $ 30 billion (£ 23 billion), almost as much as TikTok’s valuation of assets to divest, and would need to raise additional capital to fund the transaction, the sources said.
“Twitter will struggle to raise enough funding to even acquire TikTok’s US operations. It does not have sufficient borrowing capacity,” said Erik Gordon, a professor at the University of Michigan.
“If (Twitter) tries to form an investor group, conditions will be tough. Twitter’s own shareholders might prefer management to focus on its existing business,” he added.
One of Twitter’s shareholders, private equity firm Silver Lake, is keen to help fund a potential deal, one of the sources added.
Twitter also privately argued that its candidacy would face less regulatory scrutiny than Microsoft’s and would not face any pressure from China given that it is not active there, the officials said. sources.
TikTok, ByteDance and Twitter declined to comment.
TikTok has been criticized by US lawmakers over national security concerns surrounding data collection.
Earlier this week, Trump unveiled bans on U.S. transactions with the owners of the China-based messaging app WeChat and TikTok, escalating tensions between the two countries.
Trump said this week he would support Microsoft’s efforts to buy out TikTok’s US operations if the US government gets a “substantial chunk” of the revenue. However, he said he would ban the popular app on September 15.
Microsoft said on Sunday that it intends to conclude negotiations for a deal by mid-September.
(Except for the title, this story was not edited by GalacticGaming staff and is posted from a syndicated feed.)
