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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  Beijing Kunlun Tech Co., Ltd.    300418   CNE100001YF2

BEIJING KUNLUN TECH CO., LTD.

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Exclusive: TikTok's Chinese owner offers to forego stake to clinch U.S. deal - sources

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08/01/2020 | 10:43pm EDT
FILE PHOTO: TikTok logos are seen on smartphones in front of displayed ByteDance logo in this illustration

China's ByteDance has agreed to divest the U.S. operations of TikTok completely in a bid to save a deal with the White House, after President Donald Trump said on Friday he had decided to ban the popular short-video app, two people familiar with the matter said on Saturday.

U.S. officials have said TikTok under its Chinese parent poses a national risk because of the personal data it handles. ByteDance's concession will test whether Trump's threat to ban TikTok is a negotiating tactic, or whether he is intent on cracking down on a social media app that boasts it has 100 million users in the United States.

Trump told reporters onboard Air Force One late on Friday that he would issue an order for TikTok to be banned in the United States as early as Saturday. "Not the deal that you have been hearing about, that they are going to buy and sell... We are not an M&A (mergers and acquisitions) country," Trump said.

Late on Saturday, Peter Navarro, director of the White House's office of trade and manufacturing policy, told Fox News that Trump would be taking action on TikTok on Sunday or Monday.

ByteDance was previously seeking to keep a minority stake in the U.S. business of TikTok, which the White House had rejected. Under the new proposed deal, ByteDance would exit completely and Microsoft Corp would take over TikTok in the United States, the sources said.

Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added. About 70% of ByteDance's outside investors come from the United States.

"The administration has very serious national security concerns over TikTok. We continue to evaluate future policy," the White House said in a statement, declining to comment on whether Trump would accept ByteDance's concession. ByteDance in Beijing did not respond to a request for comment.

"We are here for the long run. Continue to share your voice here and let's stand for TikTok," TikTok U.S. general manager Vanessa Pappas said in a video published on the app on Saturday.

Under ByteDance's new proposal, Microsoft, which also owns professional social media network LinkedIn, will be in charge of protecting all of TikTok's U.S. user data, the sources said. The plan allows for a U.S. company other than Microsoft to take over TikTok in the United States, the sources added.

"What's the right answer? Have an American company like Microsoft take over TikTok. Win-win. Keeps competition alive and data out of the hands of the Chinese Communist Party," Republican Senator Lindsey Graham wrote on Twitter on Saturday.

Microsoft did not respond to a request for comment.

As relations between the United States and China deteriorate over trade, Hong Kong's autonomy, cyber security and the spread of the novel coronavirus, TikTok has emerged as a flashpoint in the dispute between the world's two largest economies.

ByteDance has been considering a range of options for TikTok amid U.S. pressure to relinquish control of the app, which allows users to create short videos with special effects and has become wildly popular with U.S. teenagers.

ByteDance had received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, Reuters reported on Wednesday. The proposal valued TikTok at about $50 billion, but some ByteDance executives believe the app is worth more than that.

ByteDance acquired Shanghai-based video app Musical.ly in a $1 billion deal in 2017 and relaunched it as TikTok the following year. ByteDance did not seek approval for the acquisition from the Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security risks. Reuters reported last year that CFIUS had opened an investigation into TikTok.

APP SCRUTINY

The United States has been increasingly scrutinizing app developers over the personal data they handle, especially if some of it involves U.S. military or intelligence personnel. Ordering the divestment of TikTok would not be the first time the White House has taken action over such concerns.

Earlier this year, Chinese gaming company Beijing Kunlun Tech Co Ltd sold Grindr LLC, a popular gay dating app it bought in 2016, for $620 million after being ordered by CFIUS to divest.

In 2018, CFIUS forced China's Ant Financial to scrap plans to buy MoneyGram International Inc over concerns about the safety of data that could identify U.S. citizens.

ByteDance was valued at as much as $140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private deal, Reuters has reported. The startup's investors include Japan's SoftBank Group Corp.

The bulk of ByteDance's revenue comes from advertising on apps under its Chinese operations including Douyin - a Chinese version of TikTok - and news aggregator app Jinri Toutiao, as well as video-streaming app Xigua and Pipixia, an app for jokes and humorous videos.

(Reporting by Echo Wang in New York and Alexandra Alper and David Shepardson in Washington, D.C.; Editing by Diane Craft and Daniel Wallis)

By Echo Wang, Alexandra Alper and David Shepardson

Stocks mentioned in the article
ChangeLast1st jan.
BEIJING KUNLUN TECH CO., LTD. -1.86% 26.4 End-of-day quote.57.61%
CHEETAH MOBILE INC. 0.00% 2.58 Delayed Quote.-28.93%
FOX CORPORATION 1.07% 24.99 Delayed Quote.-32.59%
MICROSOFT CORPORATION 1.60% 216.35 Delayed Quote.37.19%
MONEYGRAM INTERNATIONAL, INC. -1.98% 3.46 Delayed Quote.64.76%
SOFTBANK GROUP CORP. -0.68% 6548 End-of-day quote.37.68%
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Financials
Sales 2020 5 023 M 722 M 722 M
Net income 2020 1 632 M 235 M 235 M
Net cash 2020 2 855 M 410 M 410 M
P/E ratio 2020 18,6x
Yield 2020 1,67%
Capitalization 30 330 M 4 362 M 4 360 M
EV / Sales 2020 5,47x
EV / Sales 2021 4,54x
Nbr of Employees 717
Free-Float 99,2%
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Beijing Kunlun Tech Co., L Technical Analysis Chart | 300418 | CNE100001YF2 | MarketScreener
Technical analysis trends BEIJING KUNLUN TECH CO., L
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
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Mean consensus BUY
Number of Analysts 2
Average target price 33,98 CNY
Last Close Price 26,40 CNY
Spread / Highest target 50,6%
Spread / Average Target 28,7%
Spread / Lowest Target 6,82%
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Managers
NameTitle
Ya Hui Zhou Chairman & General Manager
Hang Jun Mao Chairman-Supervisory Board
Li Wei Wang Chief Financial Officer, Director & Deputy GM
Guo Qiang Huang Director
Bao Qing Zhao Independent Director
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