U.S. search engine startup Perplexity AI has updated its merger proposal to TikTok’s Chinese parent company, ByteDance, aiming to establish a new entity that would integrate Perplexity with TikTok U.S., according to a source who spoke to Reuters on Sunday.
The revised proposal suggests that the U.S. government could hold up to 50% ownership of the new company following a future initial public offering (IPO), the source indicated.
A document from Perplexity shared with ByteDance and potential investors outlines the formation of a new U.S. holding company named “NewCo.”
As part of the plan, ByteDance would divest TikTok U.S. to the investors, allowing TikTok’s current investors to gain equity in the new entity. Notably, the proposal stipulates that TikTok’s essential recommendation algorithm would remain with ByteDance.
The U.S. government’s stake in the new structure could reach 50% once it undergoes an IPO, which is projected to value the company at a minimum of $300 billion.
Additionally, Perplexity AI has expressed interest in being acquired by the holding company, contingent on its investors receiving a share of NewCo equity, the source added.
CNBC was the first to report on this proposal.
Last week, TikTok services were reinstated after U.S. President Donald Trump announced plans to restore the app’s access in the country following his return to power. The app had previously been suspended for U.S. users due to national security concerns.
Neither ByteDance nor the White House responded immediately to a request for comment from Reuters. On Saturday, President Trump mentioned he was in discussions with several parties regarding the acquisition of TikTok and expected to make a decision about the app’s future within the next 30 days.
Earlier this month, Reuters reported that a source revealed Perplexity had submitted a bid to ByteDance for a merger with TikTok U.S., proposing to combine the merged entity with New Capital Partners.
