Walmart is teaming up with Microsoft on TikTok bid

ByteDance Ltd.’s TikTok app is displayed in the App Store on a smartphone in an arranged photograph taken in Arlington, Virginia, on Monday, Aug. 3, 2020.
Andrew Harrer | Bloomberg | Getty Images

Walmart said it’s teaming up with Microsoft in a bid for TikTok.

The retail giant confirmed to CNBC that it’s interested in buying the tech company.

Walmart shares are up more than 5% on the news.

TikTok is nearing an agreement to sell its U.S., Canadian, Australian and New Zealand operations in a deal that’s likely to be in the $20 billion to $30 billion range, sources say. It has not yet chosen a buyer, but could announce the deal in coming days, sources say.

With Walmart’s confirmation, it joins several others bidding on the tech company, including Oracle.

Walmart is pursuing the acquisition at a time when it’s trying to better compete with Amazon. It plans to launch a membership program, called Walmart+, soon. The subscription-based service is the retailer’s answer to Amazon Prime, which includes original TV shows and movies.

In a statement, the big-box retailer said TikTok’s integration of e-commerce and advertising “is a clear benefit to creators and users in those markets.” It did not say how it would use TikTok or whether it would be part of Walmart+.

“We believe a potential relationship with TikTok US 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,” it said.  “We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.”

In Walmart’s recent earnings call, CEO Doug McMillon acknowledged the buzz around the membership program — but did not say when it would launch or what perks it would use to stand out. He said the program will speed up deliveries for customers through curbside pickup and delivery, strengthen relationships with them and collect valuable data.

Walmart had previously worked on a deal with Softbank, but that bid faced resistance from the U.S. government because it did not include a cloud technology backbone component, people familiar with the matter said.

With Microsoft involved, Walmart could be better positioned. Two years ago, the retailer announced a five-year cloud deal with Microsoft that involved the retailer adopting Microsoft’s Azure cloud infrastructure and a bundle that includes the Office 365 productivity applications. 

—CNBC’s Alex Sherman and Jordan Novet contributed to this story.

This is breaking news. Please check back for updates.

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