(Bloomberg) -- Perplexity AI submitted a bid to TikTok parent ByteDance Ltd., to merge with its US operations and create a new entity, according to a person with knowledge of the matter.
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The structure would allow most of ByteDance‘s existing investors to retain their stakes, according to CNBC, which cited a person with knowledge of the situation, and reported on the bid earlier Saturday.
Representatives for Perplexity and TikTok declined to comment.
Finding a buyer for TikTok presents a challenge, not just because ByteDance has balked at the idea of selling but because of the expected price tag. Few companies or individuals could likely afford TikTok, which is estimated to be worth as much as $50 billion.
One possibility is a billionaire acquirer, such as Elon Musk – whom the Chinese government is already evaluating as a potential new owner – or a team of investors, like Frank McCourt and Kevin O’Leary, who have publicly trumpeted their desire to take control of the app.
Perplexity AI, an artificial-intelligence search-engine startup, started 2024 with a roughly $500 million valuation and ended the year worth about $9 billion, CNBC said.
A merger with TikTok may give Perplexity access to a vast user base and a wealth of data that would feed its AI-driven search engine. TikTok’s burgeoning e-commerce operations would also be a potential complement to Perplexity’s efforts to get people to shop on its platform.
Even so, the deal would be unusual — and very difficult to pull off— for a business of Perplexity’s age and size. Funders typically back startups like Perplexity with an eye to an exit, such as a sale or an initial public offering—rather than the kind of complex financial maneuvers that a merger with TikTok would entail.
The Supreme Court on Friday unanimously upheld a law that would shut down TikTok, the wildly popular social media platform, as soon as Sunday in the US because of national security concerns. President Joe Biden told reporters after the ruling that he would not enforce the ban in his final days in office and that a decision on the app would be made by his successor.
TikTok’s China-based parent company is required to find a buyer for its US operations or face a shutdown on Sunday under the law.