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US Investors to Own a Majority Stake in TikTok Global

Rebbeca Ren

posted on September 18, 2020 5:20 am

American investors, including Oracle and Walmart, will hold at least 60% of TikTok Global, the new standalone company for the video-sharing app TikTok, Reuters reported.

Prior to this, Oracle on Monday confirmed it has struck a deal with ByteDance, the parent of TikTok, to jointly establish a new standalone company for the app in the US.

According to the agreement, Oracle will serve as not only a technology partner but also a minority shareholder. ByteDance will keep TikTok's recommendation algorithm, while the app's data will be “processed independently by Oracle".

The standalone company would also be supervised by a third party, which will report to the US government and provide continuous audits, reports, and protocols to deal with any incidents that may occur.

However, US President Donald Trump said on Wednesday that he opposed the idea that Beijing-based ByteDance would retain a majority stake in TikTok's US operations.

After that, the US Treasury submitted a revised term sheet to ByteDance late Wednesday—to address national security concerns, the new company will have a majority of American directors and a US chief executive.

Under the latest iteration, Oracle is expected to take a 20% stake in the company when it is created and Walmart is also expected to take an equity stake and have a seat on TikTok Global’s board. Currently, ByteDance is about 40%-owned by US investors such as venture firms Sequoia Capital and General Atlantic.

ByteDance has accepted the deal revisions, The New York Times said, adding that if the deal went through, TikTok Global would also be listed on the US stock market in about a year.

TikTok's IPO could be one of the largest ever in the technology sector, as the app was recently valued by ByteDance investors at more than $50 billion.

The US is undertaking a two-track national security review of the TikTok deal and any sale still requires sign-offs from both the US and China. One is through CFIUS and a separate one is through the Commerce Department.

The Trump administration is expected to decide on TikTok’s fate in the US in the next 24-36 hours, according to CNBC.