The new U.S. company that TikTok’s owner Bytedance Ltd. plans to form with Oracle Corp. intends to hold an initial public offering in about a year, according to people familiar with the matter.
The new company, which would be called TikTok Global, according to Treasury Secretary Steven Mnuchin, will be the result of a transaction forced by President Donald Trump last month because of national security concerns about TikTok’s Chinese ownership. Bloomberg News reported earlier that the Treasury Department, Bytedance and Oracle agreed to terms for the deal late Wednesday.
Mnuchin sent Bytedance a revised terms sheet late Wednesday and the company and Oracle accepted it. People familiar with the matter described the government’s changes as addressing national security concerns about the transaction and asked not to be identified because of the sensitivity of the matter.
An administration official, who was granted anonymity to discuss the sensitive negotiations, said Thursday night that Trump had been briefed on some of the parameters of the deal and that the president didn’t want China to retain a controlling interest in TikTok that would imperil Americans’ personal information.
‘Situation Is Very Fluid’
As he left the White House for a campaign trip to Wisconsin, Trump told reporters that administration officials had spoken with the companies involved in the deal on Thursday but didn’t elaborate.
“We spoke today, to Walmart, Oracle, I guess Microsoft is still involved, we’ll make a decision but nothing much has changed.”
ByteDance rejected Microsoft Corp.’s bid for the U.S. operations of TikTok last weekend, and a person familiar with the company said Thursday night that it was no longer involved in talks related to TikTok.
During the trip to Wisconsin, White House Chief of Staff Mark Meadows said, “The situation is very fluid. There’s no definite proposal that the president’s being asked to consider or reject at this point. And obviously he’ll need to weigh in before the deadline” on Sept. 20.
In a sign that the deal may go through, Secretary of State Michael Pompeo, who held some of the strongest reservations about the agreement, had since softened his opposition and told Trump so on Wednesday morning, according to two people familiar with the matter.
Bytedance is trying to win U.S. approval for a transaction with Oracle that would leave the Chinese-headquartered parent company with majority ownership of TikTok.
Any deal must be approved by both Trump — who could still reject the transaction — and the Chinese government. Beijing is unlikely to oppose an arrangement that doesn’t involve the transfer of ByteDance’s technology, especially if the Chinese parent retains majority control of TikTok, another person close to the negotiations has said.
White House senior adviser Jared Kushner is aware of the revised terms but hasn’t reviewed the latest details in depth and hasn’t weighed in on whether Trump should sign off on the deal, one person familiar with the matter said.
The White House, Treasury and TikTok declined to comment.
China’s Foreign Ministry spokesman Wang Wenbin urged the U.S. to “provide an open, fair, just and non-discriminatory business environment for foreign companies operating in the U.S.” during a briefing.
Meadows said earlier Thursday that he’s concerned that Oracle’s bid for TikTok may be a “repackaging” that won’t meet the president’s goals.
“We’re still looking at the potential details of the deal, and whether it meets the national-security thresholds, the American-interest thresholds,” Meadows said. “My big concern is if all we’re doing is repackaging it and still keeping it as a predominantly Chinese-government run company, that would not sit well with the original goal the president outlined.”
Under the plan, Oracle would acquire a minority stake in a newly formed TikTok that would be headquartered in the U.S. with an independent board approved by the U.S. government.
The new terms, which are designed to protect the data of U.S. citizens from falling into Chinese hands, include 20 pages of detailed provisions over data and national security, the people said. Under those terms, the board of directors would have to consist entirely of U.S. citizens and would include a national security committee.
That body would be led by an American data-security expert who would be the primary contact with the Committee on Foreign Investment in the U.S., which would oversee any issues of concern to the U.S. government. The previous terms hadn’t included language on the formation of that committee.
Terms of the proposed deal would give Oracle full access to TikTok’s source code and updates to make sure there are no back doors used by the company’s Chinese parent to access data on the video-sharing app’s 100 million American users, Bloomberg reported.
At least three shareholders in TikTok’s Chinese parent company — General Atlantic, Sequoia Capital and Coatue Management — would take stakes in the new business, Bloomberg has reported.
Walmart Inc., which had previously partnered with Microsoft Corp. to make an outright bid for TikTok’s U.S. business, remains interested in investing as well, and could also end up with a seat on the board, according to one of the people. With Oracle, Walmart and the continued involvement of existing U.S. investors, the new company, TikTok Global, would have a strong contingent of American investors, some of the people said.