Perplexity AI’s new TikTok merger plan could see US govt owning 50% stake

(Originally posted on : Invezz )

Perplexity AI has revised its merger proposal to ByteDance, the parent company of TikTok, to include a provision allowing the US government to own up to 50% of the new entity following an IPO, CNBC reported.

The revised proposal outlines the creation of a US-based holding company, “NewCo,” combining Perplexity AI and TikTok US.

TikTok briefly went offline in the US last week due to an anticipated ban but resumed operations shortly after Trump announced a postponement of the ban upon assuming office.

The situation remains dynamic, with significant interest from various parties in the platform’s future.

What will the TikTok deal look like?

• Structure: ByteDance would contribute TikTok US operations, excluding its core recommendation algorithm. In return, ByteDance’s existing investors would receive equity in NewCo. Similarly, Perplexity AI’s investors would receive a share of NewCo equity.
• Funding: The merger would be funded by new third-party capital, which would provide resources for a one-time dividend payment to ByteDance investors and support the new entity’s growth.
• IPO plans: The revised proposal envisions NewCo going public with a potential valuation of at least $300 billion, allowing the US government to acquire up to a 50% stake after the IPO.
• Valuation: A fair valuation for TikTok U.S. was suggested to be “well north of $50 billion.”

The proposal being considered echoes a strategy described by Steven Mnuchin, Trump’s former treasury secretary, which involves bringing in new investors to dilute Chinese ownership and comply with US regulations.

“The technology needs to be disconnected from China. It needs to be disconnected from ByteDance,” Mnuchin stated.

“There’s absolutely no way that China would ever let us have something like that in China.”

Mnuchin has previously expressed interest in investing in TikTok himself.

Why Perplexity AI wants TikTok?

Perplexity AI, a rising player in the generative AI space, surged from a $500 million valuation at the start of 2024 to $9 billion by year-end, driven by increasing investor interest and the AI boom.

By merging with TikTok US, Perplexity aims to bolster its video offerings and disrupt the search landscape further, intensifying competition with OpenAI, Google, and other tech giants.

This proposal comes amid concerns over TikTok’s operations in the US, with the Trump administration demanding a solution to address security and ownership issues.

A merger, rather than a sale, could offer ByteDance a way to retain value while meeting U.S. government requirements.

Perplexity faces competition from Microsoft, Oracle, and potentially Elon Musk, all vying for a stake or partnership with TikTok.

US President Donald Trump commented on the ongoing interest surrounding TikTok’s ownership and potential deals during a flight aboard Air Force One.

While addressing reports about Oracle’s interest in acquiring TikTok’s global operations, Trump denied having discussed the matter with Oracle CEO Larry Ellison, despite speculation.

“Numerous people are talking to me. Very substantial people. We have a lot of interest in it, and the United States will be a big beneficiary. … I’d only do it if the United States benefits,” Trump said, emphasizing the need for the U.S. to gain from any potential arrangement.

The post Perplexity AI’s new TikTok merger plan could see US govt owning 50% stake appeared first on Invezz

Source link