Business

Twitter also expresses interest in buying TikTok's U.S. operations

Microsoft is still being seen as the front-runner in bidding for TikTok, whose operation in the U.S. must be sold in 45 days to avert ban

REUTERS/Brendan McDermid/File Photo
  • U.S. President Donald Trump has given ByteDance, TikTok’s owner, 45 days to agree to a sale;
  • Experts raised doubts that Twitter would be able to outbid Microsoft;
  • Microsoft said on Sunday it was aiming to conclude negotiations for a deal by mid-September.

Twitter has approached TikTok‘s Chinese owner ByteDance to express interest in acquiring the U.S. operations of the video-sharing app, two people familiar with the matter told Reuters, 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 and complete such a transformative deal in the 45 days that U.S. President Donald Trump has given ByteDance to agree to a sale, the sources said on Saturday.

READ ALSO: TikTok could be banned from the U.S. in 45 days amid skyrocketing success in international markets

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 U.S. operations was reported earlier by the Wall Street Journal.

Twitter has a market capitalization of close to $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, according to the sources.

Twitter will have a hard time putting together enough financing to acquire even the U.S. operations of TikTok. It doesn’t have enough borrowing capacity.

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, 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 will not face any pressure from China given that it is not active in that country, the sources said. TikTok, ByteDance and Twitter declined to comment.

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TikTok has come under fire from U.S. lawmakers over national security concerns

Last week, Trump unveiled bans on U.S. transactions with the China-based owners of messaging app WeChat and TikTok, escalating tensions between the two countries.

Trump said this week he would support Microsoft’s efforts to buy TikTok’s U.S. operations if the U.S. government got a “substantial portion” of the proceeds. He nevertheless said he will ban the popular app on September 15.

Microsoft said on Sunday it was aiming to conclude negotiations for a deal by mid-September.