TikTok, the Chinese short video haring platform that had been causing a lot of buzz lately due to the fact that the US government isn’t pleased with the company’s handling of data and wants it banned might have further gotten itself in more serious situation as its competitor Triller Inc is being offered a blank-check whose merger could see it go public.
The deal is advantageous as TikTok faces more stringent situations in the US as President Trump’s administration basically wants the Chinese brand gone or be acquired by a US company even though there have been a number of announcement about Oracle becoming part of the owners of TikTok Global.
As for Triller, the service was launched back in 2015 and has very little percentage of the 100 million US-Based users of its Chinese rival but hopes that the uncertain future of TikTok could help it drive more users and influencers to the platform.
The company is therefore in talk with the investment bank Farvahar Partners which stated that negotiates a potential deal with special acquisition companies or SPAC. A SPAC in this case is a shell company which raises money in an initial public offering (IPO) in order to merge with a privately held company which then becomes publicly traded because of that.
Triller’s SPAC in this case is currently in talk with investors about a private fundraising round which will be led by investment bank UBS Group AG whereby the company is seeking to raise about US$250 million according to source close to the information.
So far, the company had been able to raise nearly US$100 million in that round with a valuation of US$1.25 billion according to the source which is making the company deliberate whether to go further with private fundraising or just opt for the deal with a SPAC.
The sources cautioned that no deal is certain and asked not to be identified because the negotiations are confidential. Farvahar Partners and UBS did not immediately respond to requests for comment.
The popularity of SPAC as an IPO alternative for companies had gradually creep into the mainstream which is another path of companies going public with less regulatory scrutiny and more certainty over the valuation which will be attained as well as funds which will be raised.
In the U.S. alone, SPACs have raised $53.8 billion so far in 2020 through IPOs, more than the total raised in the prior seven years, according to industry tracker SPAC Research.
Triller had mentioned earlier on this year that it had some 65 million monthly active users on its short video app but many analytics companies have said they have not provided enough access to independently verify the accuracy of the figures.
Triller’s celebrity users include musicians Alicia Keys, Cardi B and Eminem, and its financial backers include Kendrick Lamar and The Weeknd.
Media industry veteran Ryan Kanavaugh and healthcare executive Bobby Sarnevesht are both the the owners of the company. Kavanaugh in 2004 founded U.S. film studio Relativity Media LLC, whose films included the award-winning “The Fighter”. The studio ended up filing for bankruptcy twice, in 2015 and 2018.
Sarnevesht was a partner at Bay Area Surgical Management, which lost a $37.4 million legal battle against Aetna Inc after the health insurance firm alleged in 2012 that it had been defrauded by the surgery centers operator.
Triller had sued TikTok in the past, July precisely when it alleged that the latter infringed its patent for stitching together multiple music videos with a single audio track.
Later in August, the company said that it had partnered with investment firm Centricus Asset Management Ltd in a bid to acquire TikTok but ByteDance stated it never got engaged in such discussions.
Meanwhile the future of TikTok continues to give its US-based users concerns over whether it will be eventually edged out of the country entirely or not. Trump last month said he had given his preliminary blessing to a deal that would give a 20% stake in TikTok to computer networking conglomerate Oracle Corp and retail giant Walmart Inc. The negotiations subsequently stalled, as ByteDance maintained it would keep an 80% stake in TikTok, rather than distribute it to its investors.
TikTok is widely popular with U.S. teenagers, though its advertising business is still nascent. Major companies, including Procter & Gamble Co, Danone and Chipotle Mexican Grill Inc told Reuters last week they would keep spending on advertising with TikTok despite the uncertainty over its future.