(Reuters) – Triller, an up-and-coming competitor of the popular short video app TikTok, is currently discussing a merger with Blankoscheck acquisition firm that the American social media company would bring to the public, according to people familiar with the matter.
The deal would come when Triller tries to capitalize on TikTok’s woes. The administration of US President Donald Trump has ordered TikTok’s Chinese parent company ByteDance to sell the app, expressing concerns that US citizens’ data may be accessible to the Chinese Communist Party government. TikTok has sued the US government to prevent US app stores from being banned while contract negotiations continue.
Triller, which was launched in 2015 and has only a fraction of the 100 million users TikTok has in the US, hopes the uncertainty about its rival’s future will bring more influencers and users to its platform.
Triller is working with the investment bank Farvahar Partners to negotiate a possible deal with a so-called Special Purpose Acquisition Company (SPAC). A SPAC is a shell company that raises money through an initial public offering (IPO) to partner with a privately held company that is then floated on the stock exchange.
Triller’s SPAC negotiations are taking place along with discussions with investors about a private fundraising round, led by investment bank UBS Group AG, in which the Los Angeles-based company plans to raise around $ 250 million.
According to the sources, Triller has secured around $ 100 million so far this round at a valuation of $ 1.25 billion (£ 959.91 million). Consideration is given to whether to go ahead with private fundraising or go for the deal with a SPAC, one of the added sources.
The sources warned that no deal is certain and asked not to be identified as the negotiations are confidential.
Farvahar Partners and UBS did not immediately respond to requests for comments.
SPACs have emerged as a popular IPO alternative for companies this year, offering a path to going public with less regulatory oversight and more security in terms of valuation and fundraising. According to SPAC Research, an industry tracker, U.S. SPACs have raised $ 53.8 billion through IPOs so far in 2020, more than in the past seven years.
Triller announced earlier this year that there were 65 million monthly active users on its short video app, although many analytics companies have indicated they weren’t given enough access to independently review Triller’s numbers.
Prominent users of Triller include musicians Alicia Keys, Cardi B and Eminem. Funders include Kendrick Lamar and The Weeknd.
Triller is owned by media industry veteran Ryan Kavanaugh and healthcare manager Bobby Sarnevesht. In 2004 Kavanaugh founded the US film studio Relativity Media LLC, whose films included the award-winning “The Fighter”. The studio filed for bankruptcy twice in 2015 and 2018.
Sarnevesht was a partner at Bay Area Surgical Management, which lost a $ 37.4 million legal battle against Aetna Inc after health insurers claimed in 2012 that he was defrauded by the operator of the surgery center.
Bid for TikTok
Triller sued TikTok in July, claiming it infringed its patent for merging multiple music videos into a single audio track.
In August, Triller announced that it had partnered with investment firm Centricus Asset Management Ltd to submit an offer for TikTok. However, ByteDance said it was not involved in such discussions.
Trump said last month he gave his preliminary blessing on a deal that would give computer networking conglomerate Oracle and retail giant Walmart a 20% stake in TikTok. Negotiations later stalled as ByteDance claimed it would keep an 80% stake in TikTok instead of distributing it to its investors.
TikTok is widespread among US teenagers, although the advertising business is still emerging. Big companies like Procter & Gamble, Danone and Chipotle Mexican Grill told Reuters last week that they would continue to spend on advertising on TikTok despite uncertainty about the future.
(Reporting by Joshua Franklin and Echo Wang in New York; Editing by Greg Roumeliotis and Lisa Shumaker)