As China's ByteDance raced to seal a deal with Oracle Corp and Walmart Inc to keep its video-sharing app TikTok operational in the United States, an apparent breakthrough came last Wednesday in a phone call to U.S. Treasury Secretary Steve Mnuchin.
SAN FRANCISCO/WASHINGTON/NEW YORK - As China’s ByteDance raced to seal a deal with Oracle Corp and Walmart Inc to keep its video-sharing app TikTok operational in the United States, an apparent breakthrough came last Wednesday in a phone call to U.S. Treasury Secretary Steve Mnuchin.
What appeared as a coup clinched by Mnuchin, a former Goldman Sachs Group Inc investment banker, did not hold. ByteDance would subsequently announce a deal under which TikTok would remain its subsidiary, contradicting Oracle and Walmart, which said the majority owners would be Americans. With ByteDance and TikTok’s suitors angling for an agreement that both the United States and China can approve, key elements of what would be the social media industry’s biggest-ever deal, potentially worth more than $50 billion, were not spelled out in a comprehensive contract that is typically seen in high-stakes mergers.
After Trump got assurances from Oracle and Walmart on Friday that they would create 25,000 new jobs at TikTok and a launch an educational initiative for children, he decided to announce the deal himself, without a contract drawn up or a plan for how it could be presented to bring China onboard.He delayed the announcement until Saturday, following the passing of Supreme Court Justice Ruth Bader Ginsburg.
ByteDance said it would hold an 80% stake in TikTok Global itself, until it launches an initial public offering in the next twelve months, and that it would then gradually reduce its stake. “The divergent messages from ByteDance and Oracle reflect the difficulty of trying to thread the needle of pleasing Washington and Beijing, if that is a needle that even exists,” said John Kabealo, a regulatory lawyer not involved in the discussions.It remains unclear whether the conflicting descriptions of the deal, which still requires further CFIUS review, are the result of ambiguity in the terms or a push by ByteDance to alleviate Chinese concerns about caving in to U.S. pressure.
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