Twitter In Talks To Merge With TikTok US Business: WSJ

Twitter Inc. TWTR held preliminary discussions with China’s ByteDance Ltd. for a potential merger with the latter’s short-form video platform TikTok in the United States, according to a Wall Street Journal report Saturday.

What Happened: Twitter’s market valuation is too low at $29.4 billion to acquire TikTok on its own, but the social media company has high-profile investors, including Silver Lake, that could help it make the acquisition, the Journal noted.

TikTok’s exact valuation isn’t known, but analyst estimates vary from $15 billion to $50 billion for the U.S. business.

Twitter has been considering a deal involving the Chinese app’s U.S. operations alone, people familiar with the matter told the Journal.

Why It Mattes: Technology veteran Microsoft Corporation MSFT is also holding discussions with ByteDance to acquire TikTok’s operations in the U.S., Canada, Australia, and New Zealand, the company announced earlier this month.

According to a Financial Times report, the Bill Gates-co-founded company is considering acquiring TikTok’s entire global operations.

President Donald Trump on Thursday evening signed two executive orders banning U.S. entities from making financial transactions with ByteDance or messaging app WeChat’s China-based parent Tencent Holdings Ltd.’s TCEHY 45 days from signing of the order.

This would effectively stifle the operations of the two Chinese apps in the country, unless they are sold by their parent companies.

Several other technology and financial companies are also exploring a TikTok U.S. purchase, according to a separate report from the Journal.

What's Next: TikTok is planning to challenge the validity of the president's executive order in court, according to National Public Radio.

A lawsuit in the U.S. District Court for the Southern District of California could be filed as soon as Tuesday, NPR noted — a move that is likely to hinder the merger talks with Microsoft, Twitter, and other suitors. 

Price Action: Twitter shares closed nearly 1.5% lower at $37.14 on Friday and Microsoft shares closed about 1.8% lower at $212.48.