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Microsoft's Interest In Buying TikTok Is A 'Deal Of A Decade Opportunity'

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Microsoft's Interest In Buying TikTok Is A 'Deal Of A Decade Opportunity'

Microsoft Corporation (NASDAQ: MSFT) is in talks to acquire TikTok's operations outside of China.

Microsoft Can Get A Good Deal: TikTok's Chinese parent company ByteDance is "looking down a dark black hole" as U.S. President Donald Trump could ban the TikTok app amid national security concerns, according to Wedbush analyst Daniel Ives. In fact, Microsoft is the "only potential white knight" for ByteDance as it has the seal of approval from the White House to pursue the deal.

Related Link: Microsoft Says Looking To Wrap Up TikTok Purchase Talks By Sept. 15, After CEO's Conversation With Trump

Microsoft could even get a good deal at a $40 billion range and if the company runs it properly TikTok's valuation could soar to $200 billion over time, he said.

"We believe from a management and Board perspective this is a unique deal of a decade opportunity with a price tag that could easily be consummated," the analyst wrote in the note.

Microsoft CEO Satya Nadela earned a reputation for managing a tech company with a "golden touch" and it would be hard to bet against him in this deal.

A Trophy Asset: Microsoft set a Sept. 15 deadline to ink a deal and if it succeeds over the coming weeks it would represent a "huge win," said Raymond James analyst Robert Majek. TikTok represents a "trophy asset" with significant consumer interest.

"This is a unique opportunity in that Microsoft is negotiating with a forced seller at a time when other potential suitors, including Facebook, are facing anti-trust scrutiny from U.S. regulators," the analyst wrote in a note.

Price Matters: The price tag Microsoft pays is "important" but Microsoft will also need to account for potential regulatory restrictions from the government, ex-Microsoft CEO Steve Ballmer told CNBC. Nevertheless, the opportunity to acquire TikTok is "exciting" as it represents a good venue to increase the consumer base.

Microsoft also has a "real sophistication" in understanding how to work with governments, he said. The company fully understands that the "government is part of the fabric of everything."

Latest Ratings for MSFT

DateFirmActionFromTo
Oct 2020StifelMaintainsBuy
Oct 2020UBSInitiates Coverage OnBuy
Oct 2020RBC CapitalMaintainsOutperform

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