Perplexity AI has reviewed the merger deal it offered to ByteDance, owner of TikTok, CNBC has revealed. The proposal, which would initially consist of the creation of a new company with the union of Perplexity and the US division of TikTok, now proposes a new step: an immediate IPO so that the United States Government acquires 50% of the new entity. The new agreement proposes that ByteDance give up TikTok and keep the recommendation algorithm – responsible for the rapid growth of the social network – in exchange for investors receiving shares of the new company resulting from the operation.
According to the document to which CNBC had access, the money necessary to carry out the merger would come from third-party investors who would provide the capital for a single dividend payment to ByteDance investors. The cost of the operation is unknown, but initial estimates speak of, at least, 50 billion dollars (47.7 billion euros) for buying TikTok. The only negotiation comparable to this scenario was the purchase of Twitter by Elon Musk in 2023, the amount of which amounted to 44 billion dollars (42 billion euros).
Once the merger is completed and payment to ByteDance for TikTok, the new resulting company would go public with a public offering of at least 300 billion dollars (286,000 million euros). At this time, Washington would enter the scene, which could acquire up to 50% of TikTok shares.
Doubts about feasibility
Perplexity’s proposal, as described by CNBC, seems more like a letter of introduction to explore possibilities than a closed negotiation. At first, ByteDance has publicly assured that TikTok is not for sale. However, Perplexity believes that the proposed merger with TikTok USA, over which ByteDance would continue to maintain control of the algorithm, could circumvent this blockage.
It is also unclear where the funds to carry out the operation will come from. Perplexity is a startup focused on offering a search engine powered by artificial intelligence which tries to compete with OpenAI and Google. The technology company began 2024 with a valuation of 500 million dollars (480 million euros) and ended the year with an appreciation of up to 9,000 million dollars (8,600 million euros), motivated by the investment fever for AI.
Despite the high growth in its valuation, Perplexity does not have sufficient capital to face the acquisition of TikTok. Although he has assured that he will have external investors, no specific name has been mentioned and it is reminiscent of the adventures of the current owner of X. Musk sweated to close the Twitter operation, with a combination of his personal funds from Tesla and a loan syndicated with several investment banks. The richest man in the world is still paying the bill for that negotiation.
The advantage that Perplexity has is the high interest that the purchase of TikTok has unleashed. Many investors, including Microsoft, Amazon and Oracle, have shown interest in acquiring the social network of the moment and thus avoid the blockade imposed by US law.
The last aspect pending to be finalized is the role of Washington. If Perplexity’s forecasts are true, the White House would have to spend up to 150 billion dollars (143,000 million euros) to acquire half of TikTok. A negotiation in which it is not clear what benefit the United States Government obtains – not very fond of participating in companies – and in the face of an Administration with runaway deficit and debt, Donald Trump’s workhorse.
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