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ByteDance to spend up to US$3 billion to repurchase shares from investors

ByteDance to spend up to US$3 billion to repurchase shares from investors

The logo of TikTok's parent company ByteDance is seen at its booth during an organised media tour to the Zhongguancun National Innovation Demonstration Zone Exhibition Center in Beijing, China on Feb 10, 2022. (File photo: Reuters/Florence Lo)

BEIJING: ByteDance will spend up to US$3 billion to repurchase shares in a deal that values the Chinese unlisted owner of TikTok at around US$300 billion, according to a company memo to investors seen by Reuters on Friday (Sep 16).

The exercise is mainly aimed at helping some of its shareholders improve their liquidity positions, a person with direct knowledge of the plan said.

ByteDance had explored conducting an initial public offering in Hong Kong, sources have said, but company said in April last year it had no imminent plans.

The company's board will put the proposal, which values its shares at up to US$176.9 apiece, to its shareholders at the end of this month and plans to carry out the buyback in the next two to three months, the person with direct knowledge said.

Recent trades in the private equity secondary market valued the company at US$300 billion or lower, the person and a separate source said.

That compares with valuations of between US$300 billion and US$400 billion it received in the secondary market last year. Even at US$300 billion, it is one of the world's most valuable private companies, according to CB Insights.

The sources declined to identified as the information was confidential.

Slower economic growth, much of which is due to COVID-19 curbs, as well as Beijing's regulatory crackdown on the tech sector have crimped earnings prospects for many Chinese internet firms.

The company last month cut the price of stock options granted to employees by 20 per cent from its 2021 plan.

Revenue growth in 2021 also slowed to 70 per cent compared with more than 100 per cent a year earlier.

In addition to TikTok, ByteDance's other hit apps include its Chinese equivalent Douyin and news aggregator Jinri Toutiao. In 2021, users spent approximately US$2.3 billion in TikTok and the iOS version of Douyin, according to Sensor Tower.

Source: Reuters/st

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