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Can TikTok do it again?

Fully Charged
Bloomberg

Hi all, this is Zheping in Hong Kong. It's already been a big week for tech acquisitions. On Monday, Facebook Inc. said it would buy Kustomer Inc., in a transaction valued at more than $1 billion. And on Tuesday, Salesforce.com Inc. could announce a deal to acquire Slack Technologies Inc., which has a market cap of $24.5 billion.

But one of the year's largest tech deals has been put off so long you might have forgotten about it: TikTok's latest deadline to sell its U.S. operations to American investors is this Friday.

Chinese parent ByteDance Inc. now has only a few days to meet that deadline and close a deal that could value its most successful global asset at $60 billion. ByteDance is set to sell a large stake of its short-form video phenomenon to Walmart Inc. and Oracle Corp. in a hastily compiled agreement, sketched out before the U.S. presidential election.

Another possibility, however, is that nothing will happen.

Multiple deadlines have already come and gone since the U.S. alleged improper closeness between ByteDance and the Chinese government, and demanded that TikTok hand over control to U.S. investors. The deal was set to be finalized on Nov. 12, a date granted by the Committee on Foreign Investment in the United States, which examines national security threats. But that was pushed back by 15 days and then a further week by CFIUS, allowing the companies more time to negotiate final terms.

On Friday, TikTok could finally solidify the transaction, it could fail to do so and face repercussions enforced by the U.S. Justice Department -- or the company could manage to further drag out the process. Much of the urgency around the deal stemmed from President Donald Trump's promises to ban the app, and his administration has recently pulled back from its threats. At the same time, judges have granted preliminary injunctions against a series of TikTok bans. Those cases could lapse when President-elect Joe Biden takes office in January, unless he decides to defend Trump's orders in court.

Another reason an agreement might not be finalized this week: Any deal also faces potential roadblocks in China. At the end of September, ByteDance submitted an application in Beijing for permission to export technology used in TikTok, and while regulators were supposed to return a verdict within 30 business days -- meaning early November -- there's still no word on how it went.

For observers, there have been some upsides to the pitched legal battle now raging over TikTok. ByteDance's court filings offered a rare look at its behind-the-scenes dealings with CFIUS as well as some of TikTok's private operational metrics. ByteDance, for instance, spent more than $300 million on U.S. advertising for TikTok in 2019, according to the company's Nov. 10 filing. (That's a 10th of its profit for the year, sources have told us.) And among TikTok's more than 100 million American users, half of them use the app on a daily basis, ByteDance told the court.

If ByteDance gets another extension, it wouldn't be the only good news for the startup this month. The company has been in talks to raise new funding at a valuation of $180 billion -- a price tag that would make it the world's largest startup about three times over, according to CB Insights data. It's preparing a Hong Kong listing of its lucrative Chinese products, including TikTok's domestic twin, Douyin. And it keeps expanding into new locales, like Singapore.

As the U.S. continues to tinker, adjust and delay its policies around TikTok, ByteDance keeps getting bigger.Zheping Huang

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