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Perplexity AI alters TikTok merger proposal, plans a new IPO, and introduces a US government stake.

Market IntelMonday, Jan 27, 2025 8:20 am ET

1min read

According to multiple media reports, Perplexity AI may have offered a revised merger proposal to TikTok's parent company ByteDance over the weekend, which will lead to a new IPO, and the US government may hold up to 50% of the shares.

The original offer, submitted earlier this month, detailed a new US holding company named NewCo, including TikTok US and ByteDance's core recommendation algorithm. Existing Perplexity AI and ByteDance investors will receive equity in the new company.

The merger will be funded by "new third-party capital providers," who will "pay a one-time dividend to ByteDance investors in exchange for simplified governance."

The previous proposal was reportedly worth over $50 billion, but the final number will depend on how many ByteDance shareholders want to be part of the new entity.

Perplexity AI, an artificial intelligence search startup, has been competing with tech giants such as OpenAI, backed by Microsoft, and Google, as the demand for generative AI technology has surged, and its valuation soared to about $9 billion by the end of 2024.

Perplexity AI is one of the many companies hoping to acquire or merge with TikTok, with other suitors including Microsoft, Oracle, and possibly Elon Musk.

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