(Reuters) – China’s ByteDance plans to go public in the US for TikTok Global, the new company that will power the popular short video app, if the proposed deal is approved by the US government.
ByteDance is working to reach an agreement with the White House to prevent a US ban on TikTok threatened by President Donald Trump that could happen as early as next week.
Trump ordered ByteDance to sell TikTok last month amid concerns that the personal information of up to 100 million Americans who use the app could be leaked to the Chinese Communist Party government.
On Wednesday, he reiterated his refusal by ByteDance to keep the majority stake in TikTok.
The White House and ByteDance have agreed on a term sheet on some aspects of a deal, although Trump has not yet approved it, one of the sources said. US top ByteDance investors, Oracle and possibly Walmart would hold at least a 60% stake in TikTok’s US operations, the source said.
White House chief of staff Mark Meadows said the situation was still fluid.
“There is no specific proposal that the president should consider or reject at this point,” Meadows told reporters.
The new company, named TikTok Global, will have a majority of American directors, a US CEO and a security expert on the board, the source added. Oracle has agreed to hold a 20% stake in the company, according to the source. If Walmart is also successful in negotiating a stake, its CEO, Doug McMillon, would get a seat on TikTok Global’s board of directors, the source said.
Trump said his administration spoke to Walmart and Oracle on Thursday but “not much has changed about one deal”.
Without adding any details, he added, “I think Microsoft is still involved.” Microsoft said Sunday its offer for TikTok has been turned down. Microsoft didn’t immediately respond to a request for comment on Thursday.
“We’ll make a decision soon,” said Trump.
An IPO of TikTok would be one of the tech sector’s biggest IPOs, as the app was recently valued at more than $ 50 billion by ByteDance investors. This would further reduce ByteDance’s stake in the company to appease U.S. officials who want to see the Chinese company no longer have a grip on the video app.
The IPO filing would be on a U.S. exchange and could be in about a year, the sources said.
There is no certainty that Trump will sign the deal. It was also not immediately clear what assets TikTok Global would own beyond the app’s assets in the US. ByteDance has offered to create 25,000 new U.S. jobs with TikTok, headquartered in the United States, to win Trump’s blessing on a deal, Reuters reported.
It was also not clear whether ByteDance China could present the deal as a majority stake in TikTok. Chinese officials have stated they don’t want ByteDance to agree to a forced sale, and the company’s proposal to the White House this week saw the company retain a majority stake in TikTok.
TikTok Global’s board of directors would include a US-approved national security director who chairs a security committee that oversees the protection of user data, according to someone familiar with the matter.
The term sheet grants Oracle the right to view the source code of TikTok and contains numerous provisions to ensure data security and the requirement that all US user data remain in the US hosted by Oracle.
It’s not clear what Oracle or Walmart will pay for a stake. Oracle, Walmart, and the Treasury Department did not respond immediately.
Meadows said Thursday that the government is still reviewing details of the deal and whether it meets national security thresholds. Meadows said if TikTok was largely Chinese-run as part of the Oracle deal, it would not meet Trump’s goals.
ByteDance said Thursday that China must approve the proposed deal with the White House, pointing out that its offer to fend off a ban in the United States could be even more complicated.
According to a national Reuters / Ipsos poll last month, 40% of Americans support Trump’s threat to ban TikTok if it isn’t sold to a U.S. buyer. Among Republicans – Trump’s party – 69% said they supported the order, although only 32% said they were familiar with the app.
The White House has stepped up efforts to remove what it deems “untrustworthy” from Chinese digital networks. Beyond TikTok, Trump has issued an order banning transactions with Tencent’s messenger app WeChat.
Earlier this year, Chinese gambling company Beijing Kunlun sold the gay dating app Grindr, which it bought in 2016, for $ 620 million after CFIUS ordered the sale.
ByteDance acquired the Shanghai-based video app Musical.ly – whose user base was largely American – for $ 1 billion in 2017 without obtaining approval from CFIUS, and relaunched it as TikTok the following year. Reuters reported last year that CFIUS was investigating TikTok.
(Reporting by David Shepardson in Washington DC, Stephen Nellis in San Francisco, and Echo Wang in New York. Additional reporting by Steve Holland in Mosinee, Wisconsin. Editing by Cynthia Osterman and Stephen Coates.)