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Why Walmart got into the TikTok bidding war

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CNBC's Alex Sherman reported that Walmart is teaming up with Microsoft in the company's bid for TikTok. He joins 'Power Lunch' to discuss why Walmart is getting in on the action. Subscribe to CNBC PRO for access to investor and analyst insights on TikTok and more: https://cnb.cx/3dIH56N Walmart said Thursday that it’s teaming up with Microsoft in a bid for TikTok. The retail giant confirmed to CNBC that it’s interested in buying the popular short-form video application. Walmart shares were up nearly 5% Thursday afternoon on the news. They hit a 52-week high of $139.35, raising the retailer’s market cap to more than $387 billion. TikTok’s Beijing-based parent company, ByteDance, 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, the sources say. With Walmart’s confirmation, it joins several others trying to acquire 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.” The deal, if approved, would give Walmart and Microsoft access to hundreds of millions of consumers that could buy their products or become a lucrative audience for ads. In a filing this week, TikTok said it has nearly 100 million monthly active U.S. users. That’s up nearly 800% from Jan. 2018. Daniel Ives, managing director and technology analyst at Wedbush Securities, described TikTok as “a huge shot in the arm” for Walmart’s e-commerce business. “When you think right now about going up against the 800-pound gorilla, Amazon, obviously they’ve been behind the eight-ball,” he said. “But Walmart could use this as a golden opportunity to partner with Microsoft and monetize the TikTok base, which could start to rival Instagram in the next few years just given its global presence.” He gave the bid a 85% to 90% chance of going through. On Walmart’s recent earnings call, CEO Doug McMillon did not say when Walmart+ would launch or which perks it would include, but he acknowledged the buzz around it. He said the membership program will speed up deliveries for customers through curbside pickup and delivery, strengthen relationships with them and collect valuable data. » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC For info on the best credit cards go to CNBC Select: https://www.cnbc.com/select/best-credit-cards/ #CNBC #CNBCTV

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