The Chinese owner of Grindr, the world’s most popular gay dating app, has reached a deal to sell the platform a year after U.S. regulators forced the company into a disposal because of national security concerns.
Beijing Kunlun Tech, a gaming company, announced Friday in a stock exchange filing that it had agreed to sell Grindr to San Vicente Acquisition for about $608.5 million.
The sale brings to an end a year of uncertainty over the ownership of Grindr and highlights U.S. concern over the threat of Beijing using sensitive data harvested by its tech companies against U.S. citizens. U.S. regulators are still investigating TikTok, the Chinese short-video app, on similar grounds.
After acquiring the platform in a series of purchases starting in 2016, Kunlun announced a plan to list the unit in 2018.
But that was scuppered by the Committee on Foreign Investment in the United States, or CFIUS, the government’s investment watchdog, which last year forced Kunlun to sell Grindr. Kunlun said it signed a “national security agreement” with CFIUS to dispose of the unit by the end of June 2020.
CFIUS had feared that the Chinese government could use personal data given to the app by its 3.3 million users to blackmail U.S. citizens — for example, over their sexual orientation or HIV status. Grindr’s users may include U.S. officials and military personnel. In response, Kunlun had promised it would not transfer any sensitive data from Grindr to China and that it would stop its operations there, keeping its headquarters in the U.S.
Last year, Kunlun looked set to revisit its old plans to list the company after CFIUS dropped its opposition.
CFIUS’ intervention in 2019 was a rare instance of a retrospective veto of a deal that had already been completed, coming three years after Kunlun had first acquired its majority stake in Grindr.
The valuation of the dating app has quadrupled in the last four years, from the $151 million implied by Kunlun’s first purchase of a 61.53% stake in the company in 2016.
The sale of Grindr has the blessing of CFIUS, according to two people briefed about the matter, and should be considered a done deal, although it will still need to be technically assessed by the committee.
Grindr said any suggestion that the transaction was a “done deal” or had regulatory approval was “incorrect and wholly speculative.”
“As stated in the public disclosure filed by Kunlun, the transaction remains subject to final CFIUS review and approval, and per Kunlun-Grindr’s agreement with CFIUS, the buyer must be acceptable to CFIUS. While we are excited about the transaction and look forward to it closing, no such approval has yet been received or assured,” the company said.
It took several months to get the U.S. government agencies that constitute CFIUS, which include the Treasury and the departments of Defense, State, Commerce and Homeland Security, to agree to the terms of the deal.
Several members of Congress, from both the Republican and Democratic sides, also put pressure on the foreign investment committee to make sure that adequate guarantees had been made as part of the sale.
Details of the discussions and negotiations with CFIUS remain highly classified. However, Kunlun was not under threat of having its agreement blocked again by CFIUS, said the people with direct information about the matter.
Grindr’s senior management and core employees will continue to hold 1.41% of the company’s shares after the transaction.
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