White House close to approving sale of TikTok’s US unit to investors

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The White House is close to endorsing a deal for US investors to buy TikTok’s American operations, wresting control of the popular video app from its Chinese owners.

Under the terms of the transaction, a group of new outside investors including Andreessen Horowitz, Blackstone, Silver Lake and other large private capital firms would own about half of TikTok’s US business, according to several people familiar with the matter. That US unit would be spun off from its Beijing-based parent ByteDance, these people said.

Large existing investors in TikTok, which include General Atlantic, Susquehanna, KKR and Coatue, would also take stakes in the US arm constituting about 30 per cent of the business.

The plans, which were still in the preliminary stages and could yet change according to those involved in the process, come ahead of a deadline for a US law on April 5 that would ban the app in America unless its Beijing-based owner sells it to non-Chinese entities. 

President Donald Trump’s officials were set to meet on Wednesday to discuss the negotiations, and if the president gave his blessing, the deal could be announced imminently, people said.

“If and when there is an announcement on TikTok, it will come from President Trump,” said a White House spokesperson.

TikTok did not immediately respond to requests for comment. Andreessen Horowitz, Blackstone and General Atlantic declined to comment, while Coatue, Silver Lake and KKR did not immediately respond.

Any deal would need to be approved by Trump, as well as ByteDance and the Chinese government, which previously threatened to block any transaction but has since softened its stance. One person cautioned that the situation remained fluid and that it was still possible that the White House would abruptly change its plans.

ByteDance would retain a stake at just below 20 per cent of the business, under the terms of the deal, in order to meet requirements in the US legislation that state that no more than a fifth be in the control of a “foreign adversary”. 

The plans would still require months of further diligence, structuring and other firm financing commitments typical of normal buyout deals, with the possibility that its structure changes or some equity backers either increase or decrease their proposed investment, the people added. One person said that the groups would have three to four months to complete the spin-off process.

Oracle, co-founded by Trump ally Larry Ellison, would secure TikTok’s US data as part of the deal, people said. 

However, one point of contention remains who would control TikTok’s highly sought-after algorithm, several people said. One option under discussion is that ByteDance would continue to develop and operate the algorithm, which has been a central demand of the Chinese government, while the new US group would access it through a licensing agreement and have oversight over any changes, one person said.

But some analysts have argued that the algorithm needs to be fully operated by the US entity in order to meet the requirements of the legislation. 

Separately, Jeff Bezos’s Amazon had made an eleventh-hour bid to buy TikTok’s US business, according to several people familiar with the matter and first reported by The New York Times. However, the bid from existing investors remained the frontrunner, multiple people said.

Additional reporting by George Hammond and Rafe Uddin in San Francisco, Harriet Agnew in London, Zijing Wu in Hong Kong and Alex Rogers in Washington