The Big Dilemma Facing ByteDance’s U.S. Investors

Steven Mnuchin, a former Treasury secretary, has emerged as a potential bidder for TikTok. But deal prospects look uncertain with Beijing signaling its opposition to any deal.Credit…Tamir Kalifa for The New York Times

What’s next for ByteDance’s U.S. investors?

As Beijing makes it increasingly clear that it opposes efforts by Congress to force TikTok’s Chinese parent company, ByteDance, to sell the popular video app — government officials in China said American lawmakers were acting like a “bandit” — the tech giant’s U.S. backers are increasingly finding themselves in a quandary.

DealBook has spoken with people in the know about what these investors, including financial giants like the Susquehanna International Group, can do, with billions of dollars on the line.

A potential takeover bid by Steven Mnuchin is adding a wrinkle to matters. Mnuchin, a former Treasury secretary, told Andrew on CNBC on Thursday that he was in talks with a “combination of U.S. investors” about a TikTok deal. He added that he had spoken with some of the investors in ByteDance, TikTok’s Chinese parent, about possibly rolling over their stake. He didn’t name names, but implied that one of them was General Atlantic’s Bill Ford.

Meanwhile, Bobby Kotick, the former C.E.O. of the video game giant Activision Blizzard, also reportedly has been looking for potential partners for a bid.

ByteDance investors’ phones are ringing off the hook, DealBook hears, as shareholders and potential advisers circle. They’re gaming out all manner of scenarios, including the worst case — a TikTok ban — or a workaround transaction that could satisfy Washington and Beijing.

One option is said to be removing ByteDance’s control over how TikTok operates, while allowing it to maintain its stake, The Financial Times reported. (Shari Redstone’s National Amusement stake in Paramount Global is based on a similar arrangement.) But such a radical restructuring would almost certainly need Chinese government approval.