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Two people familiar with the matter told Reuters that had contacted ByteDance, the owner of TikTok, and expressed its intention to acquire the video-sharing application’s in the United States. Experts are skeptical about this, believing that Twitter can raise funds for a potential transaction.

Sources said on Saturday that within 45 days of U.S. President Donald Trump has agreed to ByteDance’s agreement to sell, it is far from enough whether Twitter can surpass Microsoft and complete such a transformative transaction.

“The Wall Street Journal” earlier reported that Twitter and TikTok are in preliminary negotiations, and Microsoft is still regarded as the leader in bidding for the application’s business in the United States.

According to sources, Twitter’s market value is close to 30 U.S. dollars (23 pounds), almost equal to the valuation of the TikTok assets to be divested, and that more funds need to be raised to fund the transaction.

University of Michigan professor Eric Gordon said: “Twitter will have a hard time raising enough funds to acquire TikTok’s business in the United States. It does not have sufficient borrowing capacity.”

He added: “If Twitter tries to form an group, the terms will be difficult. Twitter’s own shareholders may prefer management to focus on their existing business.”

One of the sources added that one of Twitter’s shareholders, private equity firm Silver Lake, is interested in funding potential transactions.

The source said that Twitter also privately raised a case that its bid will face less regulatory scrutiny than Microsoft, and given its inactivity in the country, it will not face any pressure from China.

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TikTok, ByteDance and Twitter declined to comment.

TikTok was criticized by U.S. lawmakers for its national issues related to data collection.

Earlier this week, Trump announced a ban on US transactions with the owners of Chinese messaging apps WeChat and TikTok, which exacerbated tensions between the two countries.

Trump said this week that he would support Microsoft’s acquisition of TikTok’s U.S. if the U.S. receives a “significant portion” of the proceeds. Nevertheless, he said that the popular application will be banned on September 15.

Microsoft said on Sunday that its goal is to reach a deal by mid-September.

© Thomson Reuters 2020


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