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Investing.com– U.S. search engine startup Perplexity AI has updated its merger proposal to ByteDance, the Chinese parent of TikTok, aiming to form a new U.S.-controlled entity incorporating Perplexity and TikTok U.S., CNBC reported on Sunday citing a proposal document seen by it.
Under the revised proposal, a new U.S. holding company called “NewCo” would be established, the report stated. ByteDance would sell TikTok’s U.S. operations to NewCo investors, granting TikTok’s existing shareholders equity in the newly formed entity. Perplexity has also suggested its own acquisition by NewCo, conditional on distributing equity to its investors, it added.
The plan proposes that the U.S. government hold up to a 50% stake in NewCo following an initial public offering (IPO) valued at a minimum of $300 billion. However, ByteDance would retain ownership of TikTok’s core recommendation algorithm, which is widely regarded as a key driver of its global popularity, according to the report.
Reuters also reported the revised proposal citing a source familiar with the matter.
TikTok’s future in the U.S. has been clouded by national security concerns, leading to temporary shutdowns and ongoing discussions about potential restructuring.
President Donald Trump recently indicated ongoing talks with multiple parties over TikTok’s future, with a decision expected within 30 days. TikTok services were restored last week after Trump announced he would allow the app’s continued operation in the country.
Perplexity AI’s proposal reflects an innovative approach, combining merger and investment strategies, which it believes could bypass political hurdles tied to outright sales. ByteDance and the White House have not commented on the revised proposal, the reports said.
This development comes as TikTok and ByteDance navigate complex regulatory scrutiny, alongside efforts by other potential suitors to secure a stake in the widely-used video-sharing platform.
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