Blackstone Considers Small Investments in TikTok
The private equity giant Blackstone is weighing taking a small stake in TikTok ahead of an April 5 deadline set by President Trump for the Chinese-owned app to change its ownership or face a U.S. ban under federal law, two people familiar with the situation said.
Investing in TikTok would give Blackstone the chance to take a bite of one of the most popular social media applications in the world, which has over 170 million American users. Four people familiar with the talks say that it is unclear whether any investment, which would be a fraction the size of Blackstone’s typical deals, will move forward. Other investors are also interested in the app, owned by the Chinese Internet giant ByteDance. Last year, Congress passed the law that forces a sale of the app because of national security concerns related to its Chinese ownership.
Mr. Trump extended the deadline to reach a deal last January and has hinted that he may do so again if a deal is not reached by next week. He also suggested this week that he might relax upcoming tariffs on China in exchange for the country’s support of a deal.
Blackstone’s talks add to TikTok’s chaotic history in the United States. The video app has repeatedly resisted political attempts to shut it down. In January, the app was dark in the United States about 12 hours and then flickered back to life. TikTok and the White House did not respond to requests for comments. As April 5 approaches, the discussion about potential suitors of the app has intensified. Two people involved in the discussions say that the most likely option would be a deal whereby existing U.S. investors of ByteDance would roll over their stakes to a new independent TikTok global company. Additional U.S. investors, like Blackstone, would be brought on to reduce the proportion of Chinese investors.
Doing so would sidestep a full sale of TikTok, which would be prohibitively expensive for most buyers and could force current ByteDance investors to sell a valuable company under duress, most likely depressing the price. The law calls for no more than 20 percent of TikTok or its parent company to be owned by people or companies in so-called foreign adversary countries, a list that includes China.
“There are a number of alternatives we can talk to President Trump and his team about that are short of selling the company that allow the company to continue to operate, maybe with a change of control of some kind, but short of having to sell,” Bill Ford, chief executive of General Atlantic, one of ByteDance’s U.S. investors, told CNBC in January.
Blackstone, which manages more than $1 trillion, typically gets involved in megadeals. It has invested in businesses such as Rover, a pet care online marketplace, Spanx women’s clothing, and the Jersey Mike sandwich chain. Susquehanna played a major role in the negotiations, according to two sources, and will likely increase its equity stake as part of any new deal. A company spokeswoman did not immediately respond to a request for comment.
David McCabe and Sapna Maheshwari contributed reporting.
