• Market Crumbs

TikTok Nears A Deal


Image via visuals on Unsplash

TikTok continued to dominate the news yesterday as each passing day gets closer to the November 12th deadline placed on its parent ByteDance by the Trump administration to sell its U.S. operations.


It all started when the Financial Times broke the news early yesterday that TikTok CEO Kevin Mayer was quitting less than six months into the job. TikTok's general manager Vanessa Pappas will fill the CEO role on an interim basis until a replacement can be found.


"In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for. Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company," Mayer told employees. "I understand that the role that I signed up for — including running TikTok globally — will look very different as a result of the U.S. administration's action to push for a sell off of the U.S. business."


News then broke that a sale of TikTok's U.S., Canadian, Australian and New Zealand operations for between $20 billion to $30 billion could come in the next few days. Mayer was reportedly set to announce his resignation with the announcement of a sale next week but was prompted to announce it yesterday when the email leaked.


As for the suitors, Microsoft and Oracle remained the likely candidates. Oracle reportedly offered a bid of $20 billion split evenly between cash and stock, with an agreement to give 50% of TikTok's profit to ByteDance. The source added that Treasury Secretary Steven Mnuchin "likes the Oracle deal."


News then broke that Walmart, which most likely wasn't on most people's radar, would team up with Microsoft in a bid to acquire TikTok. Shares of Walmart surged more than 4% on the news.

"The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets," a Walmart spokesperson said. "We believe a potential relationship with TikTok U.S. in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses. 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."


While Walmart is an unusual candidate to acquire a company like TikTok, it may make sense as Walmart continues to fight Amazon in e-commerce. Walmart is also likely keeping an eye on the progress Facebook is making in becoming a more dominant e-commerce company.


With a deal for TikTok imminent, it will be interesting to see who ends up the winning bidder and if it turns out to be worth the lofty price tag in the years to come.


Leftover Crumbs

  • Jobless claims top a million. U.S. initial jobless claims totaled just over 1 million last week, marking the second consecutive week the total has been above one million. Earlier this month jobless claims fell below one million for the first time since the pandemic began. Continuing claims declined by 223,000 to 14.535 million for the week ending August 15.

  • Abbott lands big deal. U.S. President Donald Trump is set to announce the government will purchase 150 million of Abbott's rapid COVID-19 test kits in a deal worth $750 million. The $5 test, which was just granted emergency use approval by the Food and Drug Administration on Wednesday, provides results within minutes similar to a pregnancy test. Abbott said it will ship tens of millions of kits in September before ramping up to 50 million per month in October.

  • Amazon debuts new supermarket. Amazon announced Amazon Fresh grocery, its new supermarket in Woodland Hills, CA that lets shoppers skip the checkout line, has opened. The opening marks the first of seven locations that Amazon has planned for Southern California and greater Chicago. The store is the first to feature the new Amazon Dash Cart and is about half the size of Amazon's Whole Food's locations. The Woodland Hills location will be open by invite only and will open to the general public within a few weeks.

  • Pool boom to produce IPO. Private equity firm L Catterton is preparing to take pool Supply company Leslie's Poolmart public as the market has seen a surge in demand as Americans continue to be mostly confined. Leslie's, which has more than 900 locations, could be valued at more than $3 billion in the IPO. L Catterton has reportedly hired Goldman Sachs to prepare for the IPO as market conditions will determine the timing and valuation.

  • Amazon expands into wearables. Amazon has unveiled its Halo Band, which is intended to compete with the Apple Watch and Fitbit products. The band will cost $99.99 and "provide actionable insights into overall wellness" such as "social and emotional well-being." "Despite the rise in digital health services and devices over the last decade, we have not seen a corresponding improvement in population health in the U.S.," Amazon Halo's principal medical officer Dr. Maulik Majmudar said. "We are using Amazon's deep expertise in artificial intelligence and machine learning to offer customers a new way to discover, adopt, and maintain personalized wellness habits."