Oracle Said to be Weighing Bid for TikTok’s U.S. Business
(Bloomberg) -- Oracle Corp., the world’s second-largest software maker, is weighing a surprise bid for part of TikTok’s business, seeking to rival Microsoft Corp. in the race to acquire the viral video streaming app, according to people familiar with the matter.
The company, controlled by billionaire Larry Ellison, has made a preliminary approach to other parties, including the venture capital firm Sequoia Capital, to partner with it in a bid for the app’s operations in the U.S., Canada, Australia and New Zealand, the people said, asking not to be identified.
It isn’t clear why Oracle, which focuses on business customers and has virtually no investments in consumer apps or social media, would want to acquire TikTok. However, co-founder Ellison is one of the few Silicon Valley moguls to openly support President Donald Trump. Ellison, whose company was once among the industry’s most aggressively acquisitive, hosted a fundraiser at his estate for the U.S. president in February.
The entry of Oracle would challenge Microsoft’s bargaining position, as the Redmond-based company had been the only party to publicly confirm it was in talks with TikTok owner ByteDance Ltd. Trump on Friday ordered ByteDance to sell its U.S. assets within 90 days, adding to an earlier executive order that would prohibit U.S. persons and companies from doing business with TikTok effective 45 days from Aug. 6.
Oracle didn’t immediately respond while ByteDance declined to comment when contacted by Bloomberg. Sequoia, a venture investor in ByteDance, also declined to comment. The Financial Times reported on the talks earlier.
The potential bid makes “little strategic sense,” said Anurag Rana, a Bloomberg Intelligence analyst, “given its subscale cloud business and TikTok’s lack of synergies with its core database or applications products.”
Oracle’s shares were up 2.8% in premarket trading in New York Tuesday.
Valued at roughly $166 billion, Oracle held about $43 billion in cash or near equivalents as of the end of May, making it one of few companies that could potentially afford the lofty price tag for TikTok. Analysts and bankers have estimated the value of TikTok’s U.S. business at between $20 billion and $50 billion, a wide range that reflects the complexity involved in separating TikTok’s American and global businesses.
“A potential bid by Oracle to acquire certain assets of TikTok, according to news reports, makes little strategic sense, given its subscale cloud business and TikTok’s lack of synergies with its core database or applications products. A financial investment in conjunction with private equity or other tech companies may be more plausible, in our view.”
Anurag Rana, Senior Tech Analyst, Bloomberg Intelligence
ByteDance bought the Musical.ly app in 2017 and merged it with TikTok, creating an app with over 100 million users in the U.S. alone. That deal is being unraveled by U.S. officials, which have cited national security concerns amid escalating tensions between Washington and Beijing. Now, the company is facing a fast-approaching deadline to reach a deal, or risk facing a complete shutdown of its American business.
Other bidders potentially interested in the assets include Twitter Inc. The social media company is among U.S. tech firms that have also explored possible bids though it’s unclear how far those talks have gone, according to multiple people familiar with the deliberations.
©2020 Bloomberg L.P.