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(Bloomberg) -- China’s ByteDance Ltd. is seeking a valuation of $60 billion for TikTok as Oracle Corp. and Walmart Inc. take stakes in the short-video app’s business to address U.S. security concerns, according to a person familiar with the matter.
Oracle and Walmart have rights to buy 12.5% and 7.5% respectively of a newly established TikTok Global under an agreement that won the approval of President Donald Trump, the person said, asking not to be named discussing private negotiations. The two companies would pay a combined $12 billion for their stakes if they agree to that asking price.
The final valuation had not been set as the parties worked out the equity structure and measures for data security, the person said. Terms are still in flux and the proposed valuation could still change. Beijing also has yet to approve the deal, though regulators are said to favor any transaction in which ByteDance maintains control of its valuable recommendation algorithms and other proprietary technology.
ByteDance was pressured into a deal for TikTok when Trump threatened to ban the app in the U.S. over national security concerns. After Microsoft Corp. made a proposal for a full buyout of the service, ByteDance instead turned to Oracle’s offering in which the Chinese parent will maintain a solid majority stake.
“I approved the deal in concept,” Trump told reporters Saturday as he left the White House for a campaign rally in Fayetteville, North Carolina. “If they get it done, that’s great. If they don’t, that’s OK too.”
ByteDance and Oracle representatives didn’t respond to requests for comment.
TikTok has emerged as a top target in Trump’s effort to crack down on China ahead of the November U.S. elections. Tensions between Washington and Beijing are escalating as the Trump administration wages a campaign to contain the country’s technology ascendancy that’s also ensnared Tencent Holdings Ltd., whose WeChat social media app faces a ban in the U.S.
”This is part of the broader technology decoupling of our two countries, “ said Melissa Hathaway, president of Hathaway Global Strategies and an advisor to the Obama and Bush administrations. “We’re using our different rules or policies or authorities within our countries to drive that wedge, and forcing choices between our companies and its overall customer base, unfortunately.”
The valuation for TikTok has been a looming question as Washington and Beijing clashed over the negotiations. The service for the U.S. market alone has been estimated to be worth $20 billion to $50 billion, or even more. Snap Inc., for context, trades at a $35 billion valuation.