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Oracle Challenges Microsoft's Buyout Bid for TikTok

By Anders Bylund – Aug 18, 2020 at 1:53PM

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Several anonymous reports say that the database giant is holding "serious talks" with the social media service's owners and major investors.

Under pressure to find an American buyer of the popular video-sharing app TikTok and its North American services and assets, Chinese owner ByteDance appears to have a bidding war on its hands. Database software giant Oracle (ORCL -0.90%) is reportedly throwing its hat in the ring, giving ByteDance an alternative to the previously proposed bid from Microsoft (MSFT 0.13%).

What's going on?

Oracle executives have reportedly met with ByteDance to explore a buyout of the popular video-based social network in North America, Australia, and New Zealand. The talks were first reported by The Financial Times with further detail provided by CNBC and Reuters. Anonymous insiders have told these news outlets that Oracle is "seriously considering" a bid of at least $20 billion and is hammering out further details together with some of TikTok's largest investors.

A smartphone under an auctioneer's gavel.

Image source: Getty Images.

This is an unexpected potential lifeline for TikTok because Oracle has not shown any interest in consumer services before. The buyout would add an entirely new angle to Oracle's enterprise-focused business model. Microsoft was less of a surprise since that company is a major player in both business and consumer markets. These two proposals are said to be far more substantial than any other bid on ByteDance's table, including a tentative approach by fellow social media specialist Twitter (TWTR).

By the numbers

Coming up with at least $20 billion and perhaps as much as $50 billion will stress Oracle's financial assets more than Microsoft's. The database veteran's balance sheet weighs $43 billion of cash against nearly $74 billion of long-term debt. Microsoft's cash reserves add up to $136 billion, and its debt papers stop at $82 billion. Twitter's cash and debt balances are both in the single-digit billions. Oracle and Twitter will have to come up with some creative accounting ideas or additional deal benefits in order to beat Microsoft here.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft and Twitter and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

Stocks Mentioned

Microsoft Stock Quote
$255.02 (0.13%) $0.33
Oracle Stock Quote
$83.35 (-0.90%) $0.76
Twitter Stock Quote

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