SINGAPORE—China’s ByteDance Ltd. is offering to buy back shares from its investors, allowing them the chance to cash in after the TikTok owner ruled out plans for an initial public offering.
The Beijing-based company will spend up to $3 billion in cash to repurchase shares from existing shareholders at a price of up to $176.94 a share, according to a memo sent to investors and viewed by The Wall Street Journal. The deal would value the company at around $300 billion, which is higher than most of the recent offers in the private-equity secondary market, people familiar with the matter said.
The repurchase aimed to give liquidity to some of the company’s long-term shareholders, including Sequoia Capital and Susquehanna International Group, as its plan to go public has stalled, according to people familiar with the plan. Sequoia and Susquehanna didn’t immediately respond to requests for comment.
If the $3 billion budget is insufficient to buy back all of the shares held by investors participating in the repurchase, ByteDance will acquire an equal proportion of shares from each, the people said. The company, which was founded in 2012, has several hundred shareholders, they said.
ByteDance also said it was extending its existing staff stock-incentive plan for another 10 years, according to the memo. Its board has agreed with the plan and will put it to shareholders at the end of this month, people familiar with the proposal said.
ByteDance aims to complete the repurchase in the next two to three months, one of the people said. Bloomberg and Reuters earlier reported the memo.
ByteDance, one of the world’s most valuable startups, has been struggling at home with Beijing’s crackdown on China’s tech sector, while contending with Washington’s lingering questions over how it handles TikTok’s U.S. user data and how its links with Beijing could affect content on the short-video app.
TikTok Chief Operating Officer
pushed back against senators who grilled the company over its links to China at a hearing Wednesday. She said TikTok is committed to the security of its U.S. users and is working on a deal with the U.S. government to safeguard American user data.
One of the highest priorities for TikTok is to earn trust, though this process will be long,
Shou Zi Chew,
chief executive of TikTok, said at a ByteDance all-hands meeting last month, according to employees who attended.
ByteDance had been looking to isolate TikTok from its domestic businesses and list the two segments separately, people familiar with the matter said, a move that sought to address concerns of both Beijing and Washington and would allow many of its long-term shareholders to monetize their investment.
ByteDance shelved its overseas IPO plan last year after government officials told it to focus on addressing data-security risks, the Journal has reported. ByteDance also owns Chinese apps including TikTok’s sister app Douyin and Jinri Toutiao, a news-aggregator app.
Beijing’s regulatory clampdown on its tech sector has wiped out more than half of the value of many of the country’s biggest internet companies over the past year, dealing a huge blow to market confidence. Meanwhile, China’s economic downturn has also dented ByteDance’s businesses, especially its main advertising segment, forcing the company to lay off thousands of employees.
Many of ByteDance’s businesses hadn’t met expectations in the past year, said Liang Rubo, ByteDance chairman and chief executive, at the all-hands meeting, according to employees. The company will focus on key projects and reduce its investment in those noncore units for the coming years, he added.
Julie Gao, a senior lawyer hired in April as the company’s chief finance officer, told employees at the event that the company currently had no plan or timeline for going public. That quelled market speculation that with her joining, ByteDance aimed to move forward with an IPO.
Gray-market investors in more than a dozen deals since July have priced the company at between $260 billion and $300 billion, people familiar with the deals said. Late last year, the social-media company was valued at as much as $400 billion, they said.
Some of ByteDance’s preferred shareholders will be allowed to request the company to redeem their shares for cash as of November, according to the company’s articles of incorporation.
ByteDance last month cut the price of stock options granted to employees by 21% from June to $155 a share and granted options to some 30,000 employees, according to a memo seen by the Journal. The move was seen by employees as a step to retain staff. The prices offered to employees are typically lower than the market prices of the company’s shares.
ByteDance will also put 1% of its shares into the stock-incentive program for staff, people familiar with the plan said.
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