House TikTok bill gives ByteDance six months to sell — that’s unlikely

Sale would require severing firm worth potentially $150B from its technical backbone

A forced sale of TikTok within 180 days, as House-passed legislation requires, would be one of the thorniest and most complicated transactions in corporate history, posing financial, technical and geopolitical challenges that experts said could render a sale impractical and increase the likelihood the app will be banned nationwide.

The bill, which President Joe Biden has said he would sign, raced through the House but faces a slow-walk in the Senate and constitutional challenges in the courts. Yet financial experts say the complex legislative process targeting the video app, which is owned by the China-based internet giant ByteDance, may end up being easier than any subsequent transaction.

A sale would require severing a company worth potentially $150 billion from its technical backbone while being the subject of legal challenges and resistance from China, which has pledged to block any deal.

While the bill’s supporters have argued that it’s not a ban, the practical difficulties would raise the chance TikTok would fail to meet the six-month divestiture deadline — after which, it could be blocked for its 170 million users nationwide.

“As we would say in the business, the amount of hair on the transaction is so extreme,” said Lee Edwards, a former mergers and acquisitions partner at the law firm Shearman & Sterling, using a term of art for a complicated deal with uncertain prospects.

To complete a deal of this size and complexity in half a year, including passing any regulatory review that might be required in countries around the world, would be “extraordinarily fast and aggressive,” he added. Any buyer would need to devote “huge amounts of management and strategic planning resources … with a high risk of failure.”

TikTok, one of the world’s most popular apps, would probably sell for more than $100 billion, according to one financial analyst’s estimate. And that may be low: TikTok made $16 billion in sales in the United States last year, The Financial Times reported — a revenue figure that could value the company at up to $150 billion.

That price tag would put it in a realm few buyers could touch and set a new milestone for Big Tech acquisitions. But a purchase by a rival tech giant would probably face heavy antitrust scrutiny in the United States and in countries around the world, which would slow the process, if not stop it altogether.

“There is a very short list of bidders here,” said David Locala, the former head of global technology mergers and acquisitions at Citi, the American multinational investment bank. U.S. regulators may “have to pick their poison: Do they want U.S. ownership of TikTok, or do they want one or more of the Big Tech companies to get even bigger?”

At a $100 billion purchase price, TikTok would rank among the biggest merger-and-acquisition deals in history, probably adding to the complexity and time demands. AOL’s merger with Time Warner in 2000, for $182 billion, took roughly a year to finalize.

Elon Musk’s purchase of Twitter, for $44 billion in 2022, took about six months to close — and that was a sale Twitter’s board desperately wanted. Facebook’s $19 billion acquisition of WhatsApp in 2014, which Forbes said was “hashed out in [chief ] Mark Zuckerberg’s house over the course of a few days … and sealed over a bottle of Johnnie Walker scotch,” nevertheless took seven months to close once all the regulatory hoops were cleared.

Nevertheless, the potential to own a crown jewel of the internet has spurred wealthy suitors into action. Former treasury secretary Steven Mnuchin, who runs a private equity firm that The

New York Times reported in 2022 had secured hundreds of millions of dollars in commitments from Saudi Arabia and other foreign funds, told CNBC last week that he was assembling a group of investors hoping to buy TikTok.

As Treasury chief, Mnuchin urged former President Donald Trump in 2020 to push for a forced sale of TikTok. Trump’s effort, during which he demanded that the United States receive a “very large” cut of the sale proceeds, was later halted in court.