Twitter, TikTok Have Held Preliminary Talks About Possible Combination
09 Août 2020 - 12:54AM
Dow Jones News
By Georgia Wells and Cara Lombardo
Twitter Inc. has had preliminary talks about a potential
combination with TikTok, the popular video-sharing app that the
Trump administration has declared a national-security threat due to
its Chinese ownership, according to people familiar with the
matter.
It is unclear whether Twitter will pursue a deal with TikTok,
which would face significant challenges. A deal would involve
TikTok's U.S. operations, the people said.
Microsoft Corp. has been negotiating for weeks with TikTok's
owner, Beijing-based ByteDance Ltd., and is considered the
front-runner for any possible deal, according to the people.
Twitter is seen as a long-shot bidder, given that it is much
smaller than Microsoft and would have a harder time paying for the
deal -- and the software giant is further advanced in
negotiations.
Microsoft said on Aug. 2 that it was pursuing a deal, and that
CEO Satya Nadella had discussed the issue with President Trump.
Microsoft said it was negotiating for TikTok's operations in the
U.S., Australia, Canada and New Zealand.
President Trump has said that TikTok must find a buyer for its
U.S. operations by Sept. 15 or face a ban. On Thursday, the White
House issued an executive order that would bar people in the U.S.
from transactions with ByteDance.
It is not clear what the valuation of TikTok's U.S. operations
would be, but estimates run into the tens of billions of dollars,
which raises questions about how Twitter would finance any deal.
Twitter's market capitalization is about $29 billion and
Microsoft's is more than $1.6 trillion.
Because it is much smaller, Twitter has reasoned that it would
be unlikely to face the same level of antitrust scrutiny as
Microsoft or other potential bidders, said people familiar with the
discussions.
Twitter would almost certainly need help from other investors if
it does buy TikTok. The company has far less financial firepower
than other major tech players, though it does have high-powered
investors such as private-equity firm Silver Lake. Twitter started
making a consistent profit in the past couple of years, but
reported a $1.23 billion loss in the latest quarter. Twitter
reported $7.8 billion in cash and short-term investments as of
June, compared with more than $136 billion for Microsoft.
Write to Georgia Wells at Georgia.Wells@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
August 08, 2020 18:39 ET (22:39 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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