Market Overview

TikTok Parent Proposes US IPO Post-Oracle Deal To Gratify Trump

TikTok Parent Proposes US IPO Post-Oracle Deal To Gratify Trump

ByteDance plans to take TikTok public in the United States after it forms a partnership with Oracle Inc (NYSE: ORCL), the Financial Times reported Wednesday.

What Happened: The Chinese parent of TikTok made a commitment to list the short-form video app's shares in the U.S. as a part of its efforts to avoid a ban in the country, according to FT.

An IPO was suggested to the government in the proposal to rearrange TikTok’s ownership and may be held within a year, people familiar with the matter told FT.

Concessions made by ByteDance reportedly include a U.S. headquarters for TikTok Global, ensuring all board members are American citizens, and the creation of a security committee led by a person with government security clearances.

Kevin Systrom, the founder of Facebook Inc (NASDAQ: FB) subsidiary Instagram, is said to be under consideration as the new CEO of the emergent company. 

Why It Matters: ByteDance’s proposals would give Oracle and Walmart Inc (NYSE: WMT) 20% ownership of TikTok’s global business, noted FT.

The Chinese company would reportedly retain the algorithm that underpins the app but Oracle would oversee its implementation and processing in the U.S.

At present nearly 40% of ByteDance is owned by venture capital firms such as Sequoia Capital and General Atlantic.

There is no clarity on whether ByteDance would sell part of its stake in a future IPO, according to FT.

Price Action: Oracle shares closed nearly 0.4% lower at $60.18 on Thursday and gained almost 0.4% in the after-hours session.


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