Walmart Joining Microsoft in TikTok Bid

1

SAN FRANCISCO — The race to buy TikTok took another turn on Thursday when Walmart said it was teaming up with Microsoft on a potential bid for the popular Chinese-owned video app.

The discussions are ongoing and other suitors for TikTok are involved, said two people close to the deal talks, who were not authorized to speak publicly. It is unclear which companies will ultimately secure a deal, though TikTok will likely make a decision in the coming days, they said.

In a statement, Walmart said, “We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators.”

TikTok declined to comment and Microsoft did not immediately respond to a request for comment. CNBC earlier reported Walmart’s participation.

TikTok, which is owned by the Chinese internet company ByteDance, has been under pressure from the Trump administration, which has become increasingly tough on China. White House officials have said that TikTok poses a national security threat because it could provide data about U.S. users to Beijing. This month, President Trump signed an executive order mandating that TikTok sell its U.S. operations by mid-September or cease transactions within the country.

That has pushed ByteDance and TikTok to seek a buyer, in what could amount to a blockbuster deal. Microsoft has been talking with TikTok and ByteDance for weeks about a potential acquisition, people with knowledge of the talks have said. They initially discussed Microsoft taking just a minority stake in TikTok, before the scope of a deal ballooned.

Since then, the enterprise software maker Oracle, along with other bidders, have also joined the talks.

Prices for a potential deal have ranged from $20 billion to $50 billion, the people with knowledge of the talks have said. But discussions are fluid and the situation has been shifting quickly.

Microsoft, with $137 billion in cash and a market value of more than $1.7 trillion, is far larger than other potential acquirers and has the deepest resources.

Dan Ives, an analyst at Wedbush Securities, said in a note to investors that the participation of Walmart was likely “the final piece of the puzzle that ultimately cements Microsoft successfully acquiring TikTok’s U.S. operations for likely $35 billion to $40 billion.”

Late on Wednesday, Kevin Mayer, TikTok’s chief executive, said he was resigning from the company because he had signed on for a global role. He alluded to how the app’s global structure would likely change given all the political criticism. In a note to employees, he also indicated that a deal for TikTok might be close.

“We expect to reach a resolution very soon,” Mr. Mayer wrote.

Zhang Yiming, ByteDance’s chief executive, said in his own note that ByteDance and TikTok were moving swiftly to resolve its issues in the United States and India, where the app was banned in June.

“I cannot get into details at this point, but I can assure you that we are developing solutions that will be in the interest of users, creators, partners and employees,” Mr. Zhang said.

While Walmart has its roots in brick-and-mortar stores, the world’s largest retailer has been pushing into digital businesses, partly as a way to outpace its rival Amazon. And that means expanding into areas like entertainment.

In 2018, the retailer reached a deal to have Metro-Goldwyn-Mayer create short-form original series for Walmart’s ad-supported streaming service, Vudu. At the time, Walmart said it expected to partner with more studios to create content for the service.

It also entered a joint venture with Eko, a New York start-up that focuses on “interactive storytelling,” in which viewers control the plot of commercials and television episodes.

Vudu features so-called shoppable ads, in which viewers watching on internet-connected TVs can click on the words “add to cart” on an ad and have the product being advertised dropped into their Walmart.com shopping queue.

The pandemic has shown the importance of e-commerce to Walmart and other big-box retailers. In an earnings report earlier this month, Walmart said its online sales doubled during the quarter.

Connor Ennis and Michael Corkery contributed reporting.

This is a developing story. Check back for updates.

Source link

Comments are closed.