A view shows TikTok’s office after the U.S. House of Representatives overwhelmingly passed a bill that might give TikTok’s Chinese owner ByteDance about six months to divest U.S. assets related to the short-video app under threat of a ban, in Culver City, California, March 13, 2024.
MikeBlake | Reuters
Kevin O’Leary is forming a consortium to potentially buy TikTok, with an initial bid of $20 billion to $30 billion, a whopping 90% valuation cut from the corporate’s last round of financing.
Any deal for the short video-sharing platform — valued at $220 billion in 2023, according to PitchBook — will likely eliminate the user-preference-based algorithms that helped make it so successful, the CEO of O’Leary Ventures said on “Street” CNBC Signs of Asia.”
“It’s America’s largest entertainment and business network, so it’s very popular and has great value,” he said. he said on Friday.
But the Chinese government is unlikely to sell the algorithms, “so you get the valuable domestic brand of TikTok and 170 million users with no data,” O’Leary said.
A possible buyer will need to “re-emulate” these algorithms using US code and act as a “governor” to transform the platform from “TikTok China to TikTok USA.” Hence the value reduction.
In early March, the US House of Representatives voted in favor of a bill that might force TikTok’s owner, ByteDance, to eliminate its flagship global app or face an efficient ban. However this may take months before any TikTok-related laws reaches the Senate.
It’s also unclear whether the Chinese government will allow ByteDance to sell TikTok to a U.S. buyer. The company lobbied fiercely against this bill.
Still, O’Leary said there may be at the least a 50% likelihood of a ban and compelled sale of the social media giant early next yr after the US presidential election and he is preparing for that possibility.
Any potential agreement would require the blessing of the White House, given its national security implications. O’Leary said he has already discussed the problem with presumptive Republican presidential nominee Donald Trump and plans to meet with Joe Biden, who’s searching for a second term.
The O’Leary Ventures president also said he was in talks with other parties all for joining the buyout syndicate and that he would pursue sovereign wealth funds starting in April.
Separately, former US Treasury Secretary Steve Mnuchin has also shown interest in purchasing TikTok.
“This is the most complex transaction in the history of social media and I have to build a new algorithm,” O’Leary said. “It’s a very interesting deal and I like it.”
TikTok didn’t immediately respond to a request for comment.
