Widely used social network Twitter Inc. (TWTR) has expressed its interest in purchasing U.S operations of controversial Chinese short video sharing app TiKTok. Insider sources revealed that Twitter has already approached TikTok’s parent company ByteDance.
Last week U.S President Donald Trump gave a 45 days ultimatum for Microsoft Corp. (MSFT) and ByteDance to work out a progressive deal regarding the sale of TikTok.
Talks between Microsoft and TikTok are still in their initial stages however, Microsoft is seen as a front runner in the acquisition race since experts are casting doubts if Twitter has the financial muscles for the potential purchase deal.
Twitter has a market value of around $30 billion, on the other hand TikTok is equally valued around the same price, this indicates that Twitter will have to source for additional capital to purchase TikTok.
“Twitter will have a hard time putting together enough financing to acquire even the U.S. operations of TikTok. It doesn’t have enough borrowing capacity. If it tries to put together an investor group, the terms will be tough. Twitter’s own shareholders might prefer that management focus on its existing business,” said Erik Gordon, a professor at the University of Michigan.
Twitter’s insider sources also revealed one of the company’s institutional investor, private equity firm Silver Lake is willing to help fund the potential deal.
