US-based search engine startup Perplexity AI has revised its merger proposal to ByteDance, the Chinese parent company of TikTok. According to a source cited by Reuters, the updated plan proposes the formation of a combined entity encompassing both Perplexity AI and TikTok US.
A key provision in the revised proposal includes the potential for the US government to own up to 50 per cent of the new company following an initial public offering (IPO). This restructuring aims to address regulatory concerns and pave the way for a valuation of at least $300 billion during the IPO.
Details on Perplexity’s proposed plan
As per documents shared with ByteDance and political investors, Perplexity AI plans to build a US-based holding company by the name ‘’NewCo.’’ ByteDance would divest TikTok US to NewCo’s investors, and will make sure that TikTok’s current stakeholders will retain equity in the new company.
One more notable barring in the proposal is TikTok’s core recommendation algorithm, which ByteDance seeks to keep under its possession. On the other hand, Perplexity has also offered to integrate itself into NewCo with the condition that its investors will get shares in the newly formed entity.
This merger proposal has taken place as TikTok’s recent service restoration in the United States has happened recently. Earlier, the app suspended its US operations because of national security-related laws. President Trump after regaining power announced his intention to revive the app’s access in the country.
Talks regarding TikTok’s future are going on, with Trump disclosing that he is in talks with several parties who are interested in owning the app and he stated that a decision is likely to take place within 30 days.
Recent reports also hinted that Perplexity AI has proposed ByteDance for a merger with TikTok US. The app has suggested a tie-up with New Capital Partners to create the new structure. Perplexity AI’s shift to a merger instead of a sale has been considered an effort to increase its chances of acquiring the deal with ByteDance.
(With inputs from Reuters)