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Kevin O’Leary Leads Syndicate Eyeing TikTok Purchase at Slashed Valuation

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Kevin O’Leary Leads Syndicate Eyeing TikTok Purchase at Slashed Valuation

Entrepreneur and investor Kevin O’Leary is spearheading efforts to assemble a syndicate for a potential acquisition of TikTok, proposing a starting bid ranging between $20 billion to $30 billion. This bid marks a significant reduction in valuation compared to the company’s previous funding round, slashing it by up to 90%.

Despite TikTok’s staggering valuation of $220 billion in 2023, O’Leary Ventures Chairman acknowledged that any prospective deal for the popular short video-sharing platform would likely exclude its user preference-based algorithms, a critical component contributing to its success. Speaking on CNBC’s “Street Signs Asia,” O’Leary highlighted that the algorithms, integral to TikTok’s functionality, are unlikely to be included in any sale, given the Chinese government’s hesitance to relinquish control over them.

O’Leary emphasized that a potential buyer would essentially acquire the valuable domestic brand of TikTok along with its user base of approximately 170 million users but without access to its data. As a result, the buyer would need to recreate the algorithms using U.S. code and pivot the platform’s focus from “TikTok China” to “TikTok U.S.A.,” justifying the reduced valuation.

In March, the U.S. House of Representatives passed a bill compelling TikTok’s parent company, ByteDance, to divest its flagship global app or face severe restrictions, although Senate deliberations on the matter are pending. ByteDance has vehemently opposed the proposed legislation, and uncertainty remains regarding China’s stance on allowing the sale of TikTok to a U.S. entity.

O’Leary remains cautiously optimistic about the potential acquisition, estimating a 50% chance of a ban and forced sale of TikTok post the U.S. presidential election next year. He stressed that any deal would necessitate approval from the White House due to national security concerns and indicated discussions with key political figures, including Republican presidential nominee Donald Trump and incumbent President Joe Biden.

The O’Leary Ventures Chairman revealed ongoing discussions with other interested parties to join the buyout syndicate, with plans to engage sovereign wealth funds starting April. Additionally, former U.S. Treasury Secretary Steve Mnuchin has expressed interest in acquiring TikTok.

Acknowledging the complexity of the deal, O’Leary emphasized the need to develop a new algorithm, characterizing it as “the most complex deal ever in social media.” Despite the challenges, he expressed enthusiasm for the opportunity, describing it as “very interesting.”

As of now, TikTok has not issued any official statement regarding the potential acquisition bid led by O’Leary and the syndicate.

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