Kevin O'Leary wants to buy TikTok at up to 90% discount. Here's why

Kevin O'Leary is putting together a syndicate for a potential purchase of TikTok, with a starting bid of $20 billion to $30 billion — an up to 90% cut in valuation from the company's last funding round.

Any deal for the short video-sharing platform — valued at $220 billion in 2023, according to PitchBook data — will likely exclude the user preference-based algorithms that have helped make it so successful, the O'Leary Ventures Chairman said on CNBC's "Street Signs Asia."  

"It's the largest entertainment and business network in America as it stands today, so it's of great interest and great value," hesaid on Friday.

But it is not likely that the Chinese government will sell the algorithms, "so what you're getting is the valuable domestic brand TikTok and 170 million users, with no data," O'Leary said.

A potential buyer will have to "re-emulate" those algorithms with U.S. code and act as a "steward" to transform the platform from "TikTok China to TikTok U.S.A."  Hence the valuation cut.

Earlier in March, the U.S. House of Representatives voted in favor of a bill that would force TikTok-owner ByteDance to either divest its flagship global app or face an effective ban. However, it could take months before any TikTok-related legislation hits the floor in the Senate.

It also remains unclear if the Chinese government will permit ByteDance to sell TikTok to a U.S. buyer. The company has lobbied furiously against the bill.

Still, O'Leary said there's at least a 50% chance of a ban and a forced sale of the social media giant early next year after the U.S. presidential election, and he is preparing for that possibility.

Any potential deal would need the blessing of the White House given its national security implications. O'Leary said