Walmart CEO McMillon would sit on the board of newly-created TikTok Global

Walmart CEO McMillon would sit on the board of newly-created TikTok Global
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Walmart has tentatively agreed to purchase 7.5% of TikTok Global


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Oracle Corp. and Walmart Inc. have announced tentative approval from the government to acquire a 20% stake in the newly formed company TikTok Global, which would count Walmart’s Chief Executive Doug McMillon among its board members.

The new company, TikTok Global, will be majority owned by American investors, be based in the U.S. and will count Americans as four out of five board members.

“Upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global,” Ken Glueck, Oracle’s executive vice president, said in a statement sent to MarketWatch.

See: Holiday sales forecast to grow 1% to 2.6% during new October-to-December shopping season: AlixPartners

Walmart
WMT,
+1.31%

has tentatively agreed to purchase 7.5% of TikTok Global.

Oracle’s Generation 2 Cloud data centers will also be home
to information about 100 million U.S. TikTok users.

Oracle
ORCL,
+1.79%

and Walmart say TikTok Global would IPO on a U.S. exchange in less than a year, the company will create more than 25,000 jobs, and pay more than $5 billion in tax dollars.

The two companies, along with a number of other organizations,
including Coatue Management, a tech-focused investment firm, will also launch
an educational initiative that aims to bring an online curriculum to children
across the country.

Walmart is bringing e-commerce and other retail expertise to
the table, including fulfillment and payments.  

“This partnership will provide Walmart with an important way
for us to expand our reach and serve omnichannel customers as well as grow our
third-party marketplace, fulfillment and advertising businesses,” the company
said in a statement.

When it was first announced that Walmart was involved in a bid for TikTok with Microsoft Corp.
MSFT,
+1.07%
,
analysts said it was an effort from the retail giant to make inroads with the young consumers who populate the social media site.

Read: Walmart making a play for younger shoppers with potential stake in TikTok, analysts say

Even as the deal moves forward with Oracle, Credit Suisse analysts agree, and say it could also help Walmart attract new brands.

“We believe Walmart’s evolving assortment has been an important structural change over the last two-to-three years,” analysts led by Seth Sigman said. “Data can help targeting, and ultimately increase Walmart’s power with vendors, as we have seen in recent years as well.”

Walmart announced a new private-label brand on Monday, Free Assembly, days after chief rival Amazon.com Inc.
AMZN,
+0.18%

launched Luxury Stores, a bid for high-end shoppers. Credit Suisse rates Walmart stock outperform with a $135 price target.

And: Walmart launches private-label clothing brand Free Assembly

Walmart stock has gained 15.4% for 2020 to date while the Dow Jones Industrial Average
DJIA,
-1.84%

is down 5.1% for the period.

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