ByteDance Offers to Buy Back $5 Billion Worth of Shares: SCMP

Zheping Huang and Jane Zhang, Bloomberg News

Signage at the ByteDance Ltd. offices in Singapore, on Friday, Aug. 4, 2023. ByteDance has primarily focused its operations on its social media apps, with most of its $80 billion annual revenue coming from what they generate in advertising. Photographer: Ore Huiying/Bloomberg , Bloomberg

(Bloomberg) -- ByteDance Ltd., parent of social video phenom TikTok, is offering to buy back up to $5 billion from investors, according to people familiar with the matter.

The new offer, earlier reported by the South China Morning Post, is pitched at $160 per share, the same level as ByteDance offered to employees in November, the people said, asking not to be named discussing a private matter. It’s at a valuation roughly 11% lower than the price ByteDance offered to investors in 2022, which would still place it among the 40 most valuable public companies in the world and third in China behind Tencent Holdings Ltd. and Kweichow Moutai Co.

The Beijing-based internet company has ascended to become one of China’s internet leaders, alongside Tencent and Alibaba Group Holding Ltd., leveraging the popularity of its social video services to expand into e-commerce and other spheres. Its ventures into gaming and virtual reality, however, have proven unsuccessful and the company has begun winding down efforts outside its core business, which is led by TikTok and its China twin Douyin.

ByteDance has long been the world’s most valuable startup, however plans for a splashy initial public offering have been hit by a series of setbacks, from a crackdown on internet firms at home in China to elevated scrutiny in key markets overseas. India, once TikTok’s biggest market by number of users, banned the app as part of a sweeping expulsion of Chinese software in 2020. TikTok’s US operations have also been the subject of fierce criticism by politicians in Washington, who see it as a potential national security threat. In Indonesia, TikTok was forced to suspend its burgeoning e-commerce business and is now working on a tie-up with local partner GoTo Group.

Read more: ByteDance, GoTo to Strike Deal to Save Indonesia TikTok Shop

Domestic rivals in China have had varying degrees of success recovering from the crackdown and the economic fallout from Covid Zero policies. Tencent’s stock is today up 5% from a year ago, having returned to growth and adapted to ByteDance’s challenge with the expansion of its WeChat video service. Temu-operator PDD Holdings Inc. has dethroned Alibaba as China’s most valuable e-commerce company for the first time, as its elder rival grapples with a tumultuous reorganization.

ByteDance occupies a unique position in having some of the most downloaded apps in both the US and China, with its revenue surging 30% to surpass $80 billion in 2022. Its successful rollout of TikTok Shop and on-demand services in China have made the withdrawal from the games business less of an issue than it otherwise may have been.

--With assistance from Vlad Savov.

(Updates with further details about competitive landscape from third paragraph)