TikTok on the clock: Twitter wants to purchase video-sharing app before Microsoft; deal uncertain – DNA India

Software

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 U.S. President Donald Trump has given ByteDance to agree to a sale, news agencies, citing sources, reported on Saturday.

(Representational Image – Reuters)

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DNA webdesk

Updated: Aug 9, 2020, 04:07 PM IST

Twitter Inc 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 news agency 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 Corp and complete such a transformative deal in the 45 days that U.S. President Donald Trump has given ByteDance to agree to a sale, news agencies, citing sources, reported 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 U.S. operations was reported earlier by the Wall Street Journal.

Meanwhile, as Microsoft pursues talks to purchase the US business of TikTok, Bill Gates has termed the potential deal between the two companies a poisoned chalice.

In an interview with the Wired, published on Saturday, the Microsoft co-founder said that being a top player in the social media business is not a simple job.

“Who knows what`s going to happen with that deal. But yes, it`s a poison chalice,” the billionaire philanthropist was quoted as saying in the interview.

When asked if he is wary of Microsoft getting into the social media game, Gates suggested that the software giant`s entry will give Facebook more competition which is “probably a good thing.”

On the other hand, Twitter has a market capitalization of close to $30 billion (23 billion pounds), 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”, 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, 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 has come under fire from U.S. lawmakers over national security concerns surrounding data collection.

Earlier this 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 Sept. 15.

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

Reacting to a question on US President Donald Trump`s demand that the country should get a large percentage of the proceeds if part of the short video-sharing platform TikTok`s business is bought by an American firm, Gates said that the way things were proceeding was quite strange and the cut thing is “doubly strange.”

“Anyway, Microsoft will have to deal with all of that,” he was quoted as saying.

In any case, Reuters stated in its report that TikTok, ByteDance, and Twitter have declined to comment on the matter.

(With agency inputs)