Blackstone drops out TikTok US deal consortium: Why the firm backed out? Key reasons explained

Blackstone has pulled out of a consortium aiming to invest in TikTok’s US operations, adding to growing uncertainty around the deal, sources told Reuters on Friday.The investment group, led by Susquehanna International Group and General Atlantic, both existing investors in TikTok’s parent company ByteDance, had been seen as the front-runner to acquire majority control of TikTok’s US business.The private equity firm’s exit comes amid growing uncertainty and multiple delays in the TikTok transaction, which has become central to the US-China trade talks.The deal, originally encouraged under President Donald Trump’s administration, aimed to give US investors an 80% stake in TikTok, while ByteDance would keep a minority share.However, repeated deadline extensions for ByteDance to divest its US operations have fueled uncertainty among potential investors and clouded the future of TikTok’s presence in the country.Earlier last month, Trump signed a third executive order extending the deadline for ByteDance to sell TikTok, pushing the cutoff to September 17. Earlier, in April 2024, Congress passed a law requiring TikTok to be sold or shut down by January 19, 2025.Some legislators have criticised these extensions, suggesting the Trump administration is disregarding legal requirements and national security issues regarding Chinese control of TikTok.ByteDance is considering various solutions, including selling or reorganising its US operations. The company, which generated $43 billion in revenue during the first quarter, has now exceeded Meta’s quarterly earnings, Reuters reported quoting sources.The US consortium backed by the administration in the TikTok deal includes private equity firm KKR and new investors like Andreessen Horowitz, with Oracle also expected to take a stake. However, it remains unclear whether all original consortium members are still part of the bid.Earlier this year, the group was working on a plan to spin off TikTok’s US operations into a separate American company. But negotiations stalled after China signaled it would block the deal, shortly after Trump announced new tariffs on Chinese imports.If a deal goes through, TikTok’s US operations are expected to be run by a new joint venture between an American investor group and ByteDance, which would retain a minority stake.Blackstone’s decision to withdraw underscores the growing uncertainty and complications surrounding the deal. The future of TikTok has become entangled in broader US-China trade tensions, with Trump indicating he would discuss the issue directly with Chinese President Xi Jinping. TikTok is already developing a separate version of the app for the US market.