ByteDance plans to repurchase $6 billion in shares, valuing the company at $400 billion, and will grant 300 million incentive equity to AI employees.

Beating AI News Flash: According to a shareholder letter obtained by The Information, ByteDance plans to buy back up to $6 billion worth of shares from existing investors at a valuation of approximately $400 billion. The per-share offer is $241.35, up about 20% from $200.41 in November last year.

ByteDance also proposed extending the deadline for external shareholders to require the company to repurchase all their holdings from December 11 this year to December 11, 2030.

This right was originally designed to give investors in unlisted companies an exit route. If ByteDance delays its IPO, shareholders can require the company to buy back all their shares by the agreed deadline. This deadline had previously been extended from 2022 to 2026, and now the company wants to push it back another four years. ByteDance is willing to set aside up to $6 billion to let some investors cash out first, but wants to postpone the full exit deadline for remaining shareholders.

In January this year, ByteDance reached an agreement with the U.S. government to transfer approximately 80% equity in TikTok's U.S. data security business to a U.S.-controlled joint venture, while retaining the main revenue-generating business, avoiding a U.S. ban and clearing a major obstacle to a future IPO. However, ByteDance still has no clear timeline for going public.

The $400 billion is only the valuation for this buyback, not ByteDance's highest valuation in the private market. In April this year, a founding shareholder of ByteDance sought to sell approximately $900 million worth of shares at a price implying a company valuation exceeding $600 billion.

The shareholder letter also disclosed a new AI talent incentive plan: ByteDance plans to offer AI business employees a total of 300 million incentive rights tied to the value of the AI business, in order to retain core talent. ByteDance had previously launched a similar "Doubao Stock" program to let employees share in the gains from AI business growth, but the specific allocation and vesting rules of the new plan have not yet been announced.

ByteDance is investing heavily in AI. In the first half of this year, the company's revenue grew about 30% year-over-year to $120 billion, while net profit slightly declined year-over-year to approximately $20 billion, mainly due to increased AI investment.