The parent of TikTok owner ByteDance is offering to buy back around $5 billion worth of shares from investors at a price that will value the company at about $268 billion, two people familiar with the matter said on Wednesday. One of the people said that the Chinese technology giant is offering to buy the shares at $160 each, up from $155 in a previous share buyback exercise for earlier investors. The person said the latest buyback offer aims to boost morale and convey confidence about ByteDance’s prospects.
The company, founded by entrepreneur Zhang Yiming, remains China’s most valuable unicorn thanks to the popularity of TikTok and its sister app Douyin. It also owns several other businesses, including a video gaming division called Nuverse, which makes virtual worlds for its users.
However, it has had a turbulent few years as it struggles to find new growth sources amid stricter regulation at home and scrutiny of its business in the U.S. This month, the Beijing-based firm began talks to sell mobile gaming subsidiary Moonton, just two years after acquiring it for $4 billion at the peak of metaverse hype in 2021. It also cut hundreds of jobs at its virtual-reality unit Pico, which it acquired for an undisclosed sum simultaneously.
ByteDance has vowed to become more profitable and is focusing on its core video-sharing and messaging platforms, which comprise most of its revenue. It is also working on expanding in overseas markets, hoping to catch up with Tencent Holdings and Alibaba Group Holding Ltd. in revenues as it seeks to oust them from their dominant positions in the country’s biggest internet market.
But it has been a challenging year for the company, as its valuation fell and regulators in both the U.S. and China tightened their oversight of tech companies. It has also faced a tough market for gaming, which accounts for only a tiny portion of its revenue.
The company has sought to diversify its business and reduce risk, but some of its investments must be revised. For instance, it has struggled to revive its virtual-world gaming product Nuverse sales. Last year, it canceled plans for a multimillion-dollar marketing campaign that would have featured celebrities such as Lil Nas X and Bella Poarch. The company is also trying to reduce its debt pile, and this month started discussions to borrow money from banks in a deal that could raise $5 billion. The people said this would refinance existing debt and fund the company’s overseas expansion. The people added that the company is in talks with multiple banks to finalize the deal. The company declined to comment. ByteDance has a five-member board, with three of the members being Americans. The rest represent the interests of global investors. It has no plans to list on the stock market.