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The operations of TikTok in the US are proposed to be acquired in a transaction worth $14 billion with Oracle, Silver Lake, and MGX of the UAE. All the investors shall have a share of 15% and be appointed to the new entity's board of directors. The deal was ordered according to the instructions of the Trump administration, which demanded non-Chinese dominance over TikTok's American activities.
According to the plan, the parent company, TikTok, will decrease its hold to less than 20% in ByteDance. A Trump executive order requires the deal to be done in 120 days. The consequences of non-compliance may lead to a countrywide ban of TikTok in America. The change in ownership will focus on the national security issues of possible influence by Beijing.
MGX is a joint venture of Mubadala Investment Company and G42, which contributes capital and experience to the consortium. Sheikh Tahnoon bin Zayed Al Nahyan leads the organization and has an approximate 1.5 trillion portfolio that has already invested in OpenAI and Databricks. The company is also increasing other funds to widen its contribution to investments in artificial intelligence.
Oracle and Silver Lake introduced American management control and will be in control of shaping the governance of TikTok. All firms will have the representation of the board, and the US investors will retain the majority. The proposal is indicative of the focus of the administration on ensuring that the operations of TikTok in the United States are in line with the interests of the United States without giving the strategic sway to the parent company, ByteDance.
The proposed valuation of $14 billion has generated controversy among analysts, with some arguing that it is below expectations. The final figures are to be negotiated and approved by the regulatory authorities. The Chinese government's attitude regarding the relinquishing of the ownership of ByteDance may be unsatisfactory and may complicate the finalization steps.
The correct valuation will be linked to the continued negotiations between the investors and ByteDance. The ultimate regulatory approvals in the United States and China will determine the transaction's viability. In the meantime, the deal is a high-profile attempt to offset national security requirements with a continuation of TikTok in one of its biggest markets.
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