Twitter Inc has approached TikTok’s Chinese owner, ByteDance Ltd (字節跳動), to express an interest in acquiring the US operations of the video-sharing app, two people familiar with the matter told reporters, as experts raised doubts over Twitter’s ability to put together financing for a potential deal.
It is far from certain that Twitter would be able to outbid Microsoft Corp and complete such a transformative deal in the 45 days that US President Donald Trump has given ByteDance to agree to a sale, the sources said on Saturday.
The news of Twitter and TikTok being in preliminary talks and Microsoft still being seen as the front-runner in bidding for the app’s US operations was reported earlier by the Wall Street Journal.
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Twitter has a market capitalization of close to US$30 billion, almost as much as the valuation of TikTok’s assets to be divested, and would need to raise additional capital to fund the deal, the sources said.
“Twitter will have a hard time putting together enough financing to acquire even the US operations of TikTok. It doesn’t have enough borrowing capacity,” said Erik Gordon, a professor at the University of Michigan.
“If it [Twitter] tries to put together an investor group, the terms will be tough. Twitter’s own shareholders might prefer that management focus on its existing business,” he added.
One of Twitter’s shareholders, private equity firm Silver Lake Managament LLC, is interested in helping fund a potential deal, one of the sources added.
Twitter has also privately made a case that its bid would face less regulatory scrutiny than Microsoft’s, and would not face any pressure from China given that it is not active in that country, the sources said.
TikTok has come under fire from US lawmakers over national security concerns surrounding data collection.
On Thursday, Trump unveiled bans on US transactions with the China-based owners of messaging app WeChat (微信) and TikTok, escalating tensions between the two countries.
Trump last week said that he would support Microsoft’s efforts to buy TikTok’s US operations if the US government got a “substantial portion” of the proceeds.
The Financial Times on Thursday reported that Microsoft has expanded negotiations and was after the app’s entire global operations.
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