SAN FRANCISCO: TikTok is finding out the hard way that the Oval Office may hold the trump cards in deals that raise national security concerns. President Donald Trump pushed for a sale of the popular video app, then threatened to ban it, prompting a call between him and suitor Microsoft’s Chief Executive Satya Nadella to salvage talks.
The seller, parent company Beijing-based ByteDance, and other potential buyers have much to worry about.
Trump is playing dealmaker in what could be Microsoft’s biggest acquisition since it bought LinkedIn in 2016 for US$26 bil (RM110.23 bil). After the media reported back-and-forth talks over the weekend, the US$1.6 tril company said on Sunday it would continue forging ahead after a call directly with the president.
Overseas ownership of companies or assets in the United States often draw the attention of the Committee on Foreign Investment (CFIUS). That panel, made up of various government agencies, has been investigating ByteDance’s 2017 purchase of lip-syncing app Musical.ly, which merged with TikTok.
Most companies don’t bother to fight back, but in the rare occasions they do, a US president may jump in.
That happened in 2012, the only legal challenge to CFIUS since it was established in 1975, when Chinese-based Sany Group’s affiliate Ralls Corp bought wind farms in Oregon.
Then-president Barack Obama ordered Ralls to not only divest the wind farms, but also forced it to remove items added to the facilities, including concrete foundation, and barred employee access to the premises. Sany complied.
That deal reaffirmed the commander-in-chief has carte blanche on M&A security risks. And Trump’s administration has meddled several times since.
In March, Trump required Beijing Shiji Information Technology to sell hotel management software firm StayNTouch. In 2018, Ant Financial dropped its US$1.2 bil purchase of MoneyGram. The Chinese owner of dating app Grindr was ordered to sell it three years after buying it in 2016.
The tougher environment has affected other deals. A banker spoke of two recent instances in which a Chinese firm received higher offers from Chinese suitors but went with a lower price from a US buyer to avoid CFIUS reviews.
ByteDance is the latest in a long line of Chinese firms that have learned Uncle Sam is the ultimate poison pill. – Aug 3, 2020, Reuters
