Exclusive: TikTok’s Chinese owner offers to forego stake to clinch U.S. deal


© Reuters. FILE PHOTO: TikTok logos are seen on smartphones in front of displayed ByteDance logo in this illustration

By Echo Wang and Alexandra Alper

NEW YORK/WASHINGTON (Reuters) – China’s ByteDance has agreed to divest the U.S. operations of TikTok completely in a bid to save a deal with the White House, after President Donald Trump said on Friday he had decided to ban the popular short-video app, two people familiar with the matter said on Saturday.

U.S. officials have said TikTok under its Chinese parent poses a national risk because of the personal data it handles. ByteDance’s concession will test whether Trump’s threat to ban TikTok is a negotiating tactic or whether he is intent on cracking down on a social media app that has up to 80 million daily active users in the United States.

Trump told reporters onboard Air Force One late on Friday that he would issue an order for TikTok to be banned in the United States as early as Saturday. “Not the deal that you have been hearing about, that they are going to buy and sell… We are not an M&A (mergers and acquisitions) country,” Trump said.

ByteDance was previously seeking to keep a minority stake in the U.S. business of TikTok, which the White House had rejected. Under the new proposed deal, ByteDance would exit completely and Microsoft Corp (NASDAQ:) would take over TikTok in the United States, the sources said.

Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added. About 70% of ByteDance’s outside investors come from the United States.

The White House declined to comment on whether Trump would accept ByteDance’s concession. ByteDance in Beijing did not respond to a request for comment

Under ByteDance’s new proposal, Microsoft will be in charge of protecting all U.S. user data, the sources said. The plan allows for another U.S. company other than Microsoft to take over TikTok in the United States, the sources added.

Microsoft did not respond to a request for comment.

As relations between the United States and China deteriorate over trade, Hong Kong’s autonomy, cyber security and the spread of the novel coronavirus, TikTok has emerged as a flashpoint in the dispute between the world’s two largest economies.

ByteDance has been considering a range of options for TikTok amid U.S. pressure to relinquish control of the app, which allows users to create short videos with special effects and has become wildly popular with U.S. teenagers.

ByteDance had received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, Reuters reported on Wednesday. The proposal valued TikTok at about $50 billion, but some ByteDance executives believe the app is worth more than that.

ByteDance acquired Shanghai-based video app Musical.ly in a $1 billion deal in 2017 and relaunched it as TikTok the following year. ByteDance did not seek approval for the acquisition from the Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security risks. Reuters reported last year that CFIUS had opened an investigation into TikTok.

APP SCRUTINY

The United States has been increasingly scrutinizing app developers over the personal data they handle, especially if some of it involves U.S. military or intelligence personnel. Ordering the divestment of TikTok would not be the first time the White House has taken action over such concerns.

Earlier this year, Chinese gaming company Beijing Kunlun Tech Co Ltd sold Grindr LLC, a popular gay dating app it bought in 2016, for $620 million after being ordered by CFIUS to divest.

In 2018, CFIUS forced China’s Ant Financial to scrap plans to buy MoneyGram International Inc over concerns about the safety of data that could identify U.S. citizens.

ByteDance was valued at as much as $140 billion earlier this year when one of its shareholders, Cheetah Mobile (NYSE:), sold a small stake in a private deal, Reuters has reported. The startup’s investors include Japan’s SoftBank Group Corp.

The bulk of ByteDance’s revenue comes from advertising on apps under its Chinese operations including Douyin – a Chinese version of TikTok – and news aggregator app Jinri Toutiao, as well as video-streaming app Xigua and Pipixia, an app for jokes and humorous videos.





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Alstom offers French factory sale to clinch Bombardier deal By Reuters


© Reuters. FILE PHOTO: A logo of Alstom is seen at the Alstom’s plant in Semeac near Tarbes

PARIS (Reuters) – France’s TGV high-speed train maker Alstom (PA:) on Thursday offered to sell a French rail factory and make other concessions to win European Commission approval for its planned purchase of Bombardier (OTC:) Inc’s (TO:) transportation business.

The commitments also included selling Alstom’s Coradia Polyvalent – a range of regional trains – and divesting a Bombardier commuter trains division and the production facilities attached to that at its Hennigsdorf site in Germany.

Alstom’s bid in February of up to 6.2 billion euros ($7.0 billion) for Montreal-based Bombardier’s rail business has faced scrutiny from EU antitrust authorities, which have been expected to demand concessions to approve the deal.

By buying Bombardier’s train division, Alstom is seeking to create the world’s second largest train manufacturer to compete more effectively with Chinese leader CRRC Corp (SS:). Last year, EU regulators blocked Alstom’s attempt to merge rail assets with Siemens AG (DE:).

Alstom said it would sell its Reichshoffen factory in France, confirming a report by Reuters on Wednesday. The site in Eastern France has around 800 employees and produces mostly regional trains.

French unions, which are due to be updated on the concessions on Thursday, were still hoping to keep the site, a source familiar with the matter said on Wednesday.

The EU is due to decide whether or not to pursue a deeper enquiry on July 16, following its preliminary review of the deal.

Alstom said other concessions included providing access to some products within Bombardier’s train control systems and signalling units – one of the areas where the combined companies would have a large market share.

Alstom’s shares were up 0.3% at 43.05 euros by 0828 GMT.

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