Perplexity AI has updated its bid to merge with TikTok U.S., proposing a structure that allows the U.S. government to acquire up to 50% ownership upon a future IPO.
Perplexity AI has revised its merger proposal for TikTok's parent company, ByteDance. The updated proposal, aimed at creating a new entity combining Perplexity and TikTok U.S., now includes a provision allowing the U.S. government to acquire up to 50% ownership in the company upon a future Initial Public Offering ( IPO ). This revision comes after CNBC obtained a proposal document outlining the creation of a new U.S. holding company, 'NewCo.
'According to the document, ByteDance would contribute TikTok U.S., excluding its core recommendation algorithm, in exchange for its existing investors receiving equity in NewCo. Perplexity AI would contribute itself, with its investors receiving a distribution of NewCo equity. The merger's financial backing would originate from new third-party investors, as agreed upon by both parties. These investors would provide capital for a one-time dividend payment to ByteDance investors, facilitating simplified governance, and supporting the new entity's growth.This proposed structure allows most of ByteDance's existing investors to retain their equity and integrates more video content into Perplexity. A source familiar with the situation previously told CNBC that Perplexity AI believes its bid stands a chance because the deal would be a merger rather than a sale. The revised proposal grants the U.S. government the opportunity to acquire up to 50% ownership in the new entity once it reaches an IPO valuation of at least $300 billion. While a fair price is estimated to be significantly above $50 billion, the final valuation will depend on the participation of ByteDance's existing shareholders who choose to remain invested in the new entity versus those opting to sell their stakes. The U.S. government has taken temporary measures to restore TikTok's operations in the U.S. and has suggested plans involving an American stakeholder acquiring the company and subsequently selling a 50% stake to the U.S. government. In a recent TikTok video, CEO Shou Zi Chew expressed gratitude to President Trump for his commitment to finding a solution that ensures TikTok's continued availability in the United States
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