Jan 18 (Reuters) - U.S. search engine startup Perplexity

AI submitted a bid on Saturday to TikTok's Chinese parent

ByteDance for Perplexity to merge with TikTok U.S., a source

familiar with the company's plans told Reuters.

TikTok faces a U.S. ban starting on Sunday if it does not

cut ties with ByteDance, although President-elect Donald Trump

said on Saturday he would likely give the short-video

social-media platform a 90-day reprieve on Monday.

CNBC first reported the offer.

Perplexity would merge with TikTok U.S. and create a new

entity by combining the merged company with New Capital

Partners, the person said.

The new structure proposed by Perplexity would allow for

most of ByteDance's existing investors to retain their equity

stakes and would bring more video to Perplexity, the source

said, requesting anonymity because the matter is confidential.

TikTok did not immediately respond to requests for comment.

New Capital Partners could not be immediately reached.

Perplexity AI believes its bid may succeed since the

proposal is a merger rather than a sale, the person said.

Perplexity AI's search tools enable users to get fast

answers to questions, with sources and citations. It is powered

by large language models that can sum up and generate

information, from OpenAI to Meta Platforms' ( META ) open-source

model Llama.

TikTok, which has captivated nearly half of all Americans,

powered small businesses and shaped online culture, said on

Friday it will go dark in the U.S. on Sunday unless President

Joe Biden's administration provides assurances to companies such

as Apple ( AAPL ) and Google that they will not face

enforcement actions when a ban takes effect.