Perplexity AI proposes to merge with Tiktok, with US authorities getting half, supply says

(Reuters) -U.S. search engine startup Perplexity AI has revised the merger proposal it had submitted to TikTok’s Chinese language guardian ByteDance to create a brand new entity combining Perplexity and TikTok U.S., an individual accustomed to the proposal advised Reuters on Sunday.

The proposal requires the U.S. authorities to come clean with 50% of the brand new firm upon a future preliminary public providing (IPO), the individual stated.

A Perplexity doc shared with ByteDance and new traders proposed the creation of a brand new U.S. holding firm referred to as “NewCo”, the individual stated.

Underneath the proposal, ByteDance would promote TikTok U.S. to the traders, which might give TikTok’s present traders fairness within the firm. The proposal would additionally exclude TikTok’s core advice algorithm, which ByteDance would maintain, the individual stated.

The U.S. authorities would come clean with half of the brand new construction as soon as it goes by way of an IPO of a valuation of not less than $300 billion.

Perplexity AI would additionally supply to be acquired by the holding firm if its personal traders obtained a distribution of the NewCo fairness, the individual stated.

CNBC first reported information of the proposal.

TikTok companies had been restored final week after U.S. President Donald Trump stated he would revive the app’s entry within the nation after returning to energy. TikTok shut off its app for U.S. customers on account of a legislation that cited nationwide safety.

ByteDance and the White Home didn’t instantly reply to a Reuters request for remark. On Saturday, President Donald Trump stated he was in talks with a number of folks over shopping for TikTok and would seemingly have a call on the favored app’s future within the subsequent 30 days.

Earlier this month, Reuters reported {that a} supply stated Perplexity submitted a bid to ByteDance for the startup to merge with TikTok U.S., including that Perplexity would merge with TikTok and create a brand new entity by combining the merged firm with New Capital Companions (WA:CPAP).

The supply who spoke to Reuters earlier this month stated Perplexity AI believes its bid might succeed for the reason that proposal is a merger somewhat than a sale.