Blackstone Considers Small Investment in TikTok

Blackstone Eyes Stake in TikTok Amid U.S. Ownership Deadline

Leading private equity firm Blackstone is considering acquiring a minority stake in TikTok as the popular video-sharing application faces a crucial April 5 deadline. Set by the Trump administration, this deadline mandates that TikTok, owned by Chinese entity ByteDance, alter its ownership structure or risk a ban in the United States under federal law, according to sources familiar with the matter.

Potential Investment and Strategic Implications

An investment in TikTok would provide Blackstone with an opportunity to gain a foothold in one of the world’s most utilized social media platforms, boasting over 170 million users in America alone. Sources indicate that while discussions are ongoing, the potential investment may represent a smaller scale transaction relative to Blackstone’s typical deal size. Other investors are also reportedly engaging with ByteDance regarding the app’s future.

Such a deal could potentially curry favor with former President Trump, who previously championed measures to prevent TikTok from being prohibited under U.S. law. Legislation enacted last year necessitates the divestiture of the app due to national security concerns stemming from its Chinese ownership.

Deadline Extensions and Political Considerations

Former President Trump previously extended the deadline for a resolution in January and has hinted at further extensions if an agreement remains elusive by next week’s deadline. Furthermore, he suggested the possibility of easing forthcoming tariffs on goods from China in exchange for Beijing’s support in facilitating a deal concerning TikTok.

TikTok’s U.S. Operations and Political Scrutiny

Blackstone’s interest adds another layer to TikTok’s complex history within the United States, as the platform has repeatedly navigated political pressures aimed at restricting its operations. Notably, in January, the app experienced an approximately 12-hour service disruption in the U.S., before resuming activity.

A Blackstone representative stated the firm’s policy of not commenting on market speculation. Neither TikTok nor the White House offered immediate responses to requests for comment. Earlier reports from Reuters also indicated Blackstone’s interest in the app.

Deadline Approaches, Suitors Emerge

As the April 5 deadline nears, discussions surrounding potential acquirers for TikTok have intensified. Sources reveal that former President Trump has received numerous proposals and that his interest in different deal structures remains fluid.

Exploring Deal Structures and Alternatives to Full Sale

A leading proposal involves existing U.S.-based investors in ByteDance reinvesting their equity into a newly formed, independent global TikTok entity, according to individuals involved in the discussions. Bringing in additional U.S. investors, including firms like Blackstone, would further dilute the proportion of Chinese ownership.

This approach could potentially avert a complete sale of TikTok, which would be financially prohibitive for most prospective buyers. Forcing a sale under duress could also undervalue the asset for current ByteDance investors. The existing law stipulates that ownership by entities within countries designated as foreign adversaries, including China, must not exceed 20 percent of TikTok or its parent company.

Investor Perspectives and Strategic Maneuvering

Bill Ford, CEO of General Atlantic, a U.S. investor in ByteDance, indicated in January to CNBC that “There are a number of alternatives we can discuss with President Trump and his team that fall short of selling the company but allow it to continue operating, potentially with some form of change in control, but without necessitating a sale.”

Blackstone’s Investment Profile and China Ties

Blackstone, overseeing assets exceeding $1 trillion, typically engages in large-scale investments across diverse sectors. Their portfolio includes companies such as Rover, an online platform for pet care services; Spanx, a women’s apparel brand; and the Jersey Mike’s sandwich restaurant chain.

Stephen Schwarzman, Blackstone’s chairman, is a prominent Republican donor and supporter of former President Trump, with significant business interests within China.

Key Investors and Stakeholder Involvement

Currently, ByteDance’s major investors include Susquehanna, a global trading firm holding approximately 15 percent of the Chinese company as of last year, and General Atlantic, which initially invested in ByteDance in 2017 at a $20 billion valuation. Sources suggest Susquehanna is playing a central role in deal negotiations and is likely to increase its equity stake in TikTok as part of any new agreement.

Oracle, which currently hosts some of TikTok’s data infrastructure, has also been involved in ongoing discussions, according to sources. A company spokesperson did not immediately provide a response to a request for comment.