Twitter has reached out to TikTok’s Chinese owner ByteDance to express an interest in acquiring the video-sharing app’s US operations, according to a report by Reuters.
Many experts expressed doubts about Twitter’s ability to raise funds for to put together a possible deal.
It is far from certain that Twitter can outbid Microsoft and close such a transformative deal in the 45 days in which US President Donald Trump approved a sale for ByteDance, the sources said on Saturday.
News that Twitter and TikTok are in preliminary talks and Microsoft is still seen as the front runner in bidding for the app’s US operations was previously reported by the Wall Street Journal.
Twitter has a market cap of nearly $ 30 billion (£ 23 billion), almost as much as the valuation of TikTok’s divested assets, and it would need to raise additional capital to fund the deal, according to sources.
“Twitter will have a hard time raising enough funds to take over TikTok’s US operations. It doesn’t have enough credit,” said Erik Gordon, a professor at the University of Michigan.
“When (Twitter) tries to put together a group of investors, the terms get tough. Twitter shareholders may prefer management to focus on the existing business,” he added.
One of Twitter’s shareholders, private equity firm Silver Lake, is keen to fund a potential deal, one of the sources added.
Twitter has also privately claimed that its offering would be subject to fewer regulatory controls than Microsoft’s, and that China will not face any pressure as it is not active in that country.
TikTok, ByteDance and Twitter declined to comment.
TikTok has come under fire from U.S. lawmakers over national security concerns related to data collection.
Earlier this week, Trump revealed bans on U.S. transactions with the China-based owners of the messaging app WeChat and TikTok, escalating tensions between the two countries.
Trump said this week that he would support Microsoft’s efforts to buy TikTok’s US operations if the US government received a “significant portion” of the proceeds. Still, he said he would ban the popular app on September 15th.
Microsoft said Sunday it intends to finalize negotiations on a deal by mid-September.
(Source – Gadgets 360)