ByteDance, the parent company of social media sensation TikTok, is planning to spend up to $5 billion on buying back stock in an effort to allow its shareholders to cash out of their holdings, a source familiar with the matter told CNBC.
The Chinese tech giant is offering shareholders $160 per share, which values the firm at around $268 billion. This move comes as ByteDance seeks to provide an opportunity for early investors to make a return on their investments, especially in the absence of a traditional liquidity event like an initial public offering.
There is no specific timeline for the completion of the share repurchases, but ByteDance has reportedly reached out to shareholders to gauge interest in the program.
These buybacks are the latest in a series of moves by ByteDance to provide liquidity to its shareholders, after the company recently offered to repurchase restricted stock units (RSU) and options from employees at the same price of $160 per share.
Founded in 2012, ByteDance has been the subject of IPO rumors for several years. However, the company has faced numerous challenges, particularly relating to its popular app TikTok. Lawmakers around the world, especially in the U.S., have raised concerns about the safety of American data on the platform, leading to increased scrutiny and potential regulatory issues.
Additionally, ByteDance has also faced challenges in its gaming division, resulting in the company cutting hundreds of jobs from that sector.
The move to buy back stock comes amidst a slowing Chinese economy and stricter domestic regulation in the internet sector, posing further challenges for the tech giant.
ByteDance declined to comment on the specifics of the share repurchase program.