Twitter Might Be Interested in Buying TikTok

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Image source: Vanguard

The micro-blogging platform – Twitter, has joined the list of suitors wooing the short video sharing app – TikTok.

It is unsure if Twitter will end up acquiring TikTok, however, the company may have started preliminary talks with the ByteDance, TikTok’s parent company.

Tiktok is currently facing a 45-day countdown to a US ban, after an executive order was signed by the Trump government on Thursday.

The ban restricts relationship with TikTok by any entity under the US jurisdiction.

Experts have raised doubts on Twitter’s ability to acquire the video sharing company, owned by ByteDance. This is because the Twitter’s market capitalization is almost the same as TikTok’s US market value.

The deal looks gloomy for Twitter, except the company raise funds to cover the expenditure.

Twitter will have a hard time putting together enough financing to acquire even the U.S. operations of TikTok. It doesn’t have enough borrowing capacity. If it (Twitter) tries to put together an investor group, the terms will be tough. Twitter’s own shareholders might prefer that management focus on its existing business,” said Professor Erik Gordon, of the University of Michigan.

Twitter’s market capitalization is approximately $29 billion and Microsoft market capitalization is over $1.6 trillion. Experts say that TikTok deal will possibly be between $10 billion and $30 billion.

Experts also say that the smaller size of Twitter company could be good for the deal, because the company will not be subject to the same level of scrutiny as a bigger tech company would.

The acquisition of TikTok will not be Twitter’s first attempt at purchasing a video sharing app. In 2012, Twitter, in the past, bought the video app – Vine – for $30 million, before shutting down the app in 2016.

The US government has earlier, given TikTok 45 days to find a US buyer, or face a ban on it’s operation.

While Twitter would not be the first company to show interest, Microsoft has already shown public interest in acquiring TikTok. Microsoft has the financial willpower to wield the deal, however, talks are still ongoing.

At the time of publishing this report, neither Twitter, nor TikTok, have made any statement about the possible acquisition.

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