Oracle (ORCL) and Walmart have issued a joint statement confirming their plans to snap up a minority stake in TikTok’s U.S. business. Oracle will acquire a 12.5% stake in TikTok Global, while Walmart will take a 7.5% interest.
The move came after President Donald Trump approved the deal “in concept” on Saturday. The President has also announced that TikTok’s Chinese parent ByteDance “has received tentative approval for an agreement with the U.S. Government to resolve the outstanding issues.”
To facilitate the deal, TikTok is creating a new company called TikTok Global, as the Trump administration was concerned about TikTok’s Chinese ownership and therefore demanded that TikTok’s Chinese parent, ByteDance, divests its U.S. operations to America.
TikTok Global will be an independent American company and will be majority owned by American investors. The new company also has plans to bring 25,000 jobs across the country. (See ORCL stock analysis on TipRanks).
Software giant Oracle will become its secure cloud technology provider and will host all US user data, and ensure data privacy to TikTok’s users in the U.S. Retail behemoth Walmart (WMT) will provide services including e-commerce, fulfillment, payments to the new company.
“All the TikTok technology will be in possession of TikTok Global, and comply with U.S. laws and privacy regulations. Data privacy for 100M American TikTok users will be quickly established by moving all American data to Oracle’s Generation 2 Cloud data centers, the most secure cloud data centers in the world,” the companies said.
On Sept. 15, Needham analyst Jack Andrews assigned a Hold rating on the stock. He cited many unanswered questions related to the TikTok deal structure, its due diligence regarding IP, data privacy and security and the chances of an Oracle-TikTok deal receiving regulatory approval.
He added “given the lack of clarity on the deal and further pending news flow, we await more details to assess the partnership’s full impact.”
Currently, the Street has a cautiously optimistic outlook on Oracle. The Moderate Buy analyst consensus is based on 7 Buys, 12 Holds, and 1 Sell. The $61.22 average price target implies upside potential of 2.5% to current levels. Shares have gained 12.8% year-to-date.
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