The Redwood City-based software company saw huge gains in it stocks and shares on Monday following news of a major deal struck with the popular Chinese social media platform, reports revealed.
Oracle Corp’s reportedly winning bid to buy out TikTok owner Bytedance’s US operations sent shares for the software firm surging up to 21 percent to $64.60 on Monday in premarket trading, according to media reports.
Stocks for the US tech firm also rallied 13 percent in the same period, British trading platform IG Group reported.
But the deal is more likely to restructure the company’s corporate operations as Oracle was named a ‘trusted tech partner’ by the Chinese tech unicorn rather than an outright sale, Bloomberg said, citing sources familiar with the matter.
The news comes after Oracle announced better than expected fiscal 2021 first quarter earnings this year, with the company revealing a 2 percent year-on-year revenue growth at $9.4bn, beating Wall Street estimates of $9.19bn.
The developments come after Microsoft Corp said in a statement that ByteDance had rejected its offer to buy out the firm’s US operations, adding that the proposal would have been “good for TikTok’s users, while protecting national security interests”.
Tensions between Washington and Beijing after US president Donald Trump demanded the Chinese tech firm complete the sale by 15 September or face a complete ban in the US. But ByteDance has refused to sell or transfer its developer code used in its app, according to sources cited by the South China Morning Post, reportedly complicating an outright sale.
The news comes after Beijing restricted algorithms and technologies used in the popular social media platform.
The deal would satisfy the Trump administration’s national security concerns on data security but has not been formally approved by Washington, the SCMP added.
US treasury secretary Steven Mnuchin also announced on Monday that the Committee on Foreign Investment in the US (CFIUS) would review Oracle’s proposal this week, with a 20 September deadline for the deal.
“We did get a proposal over the weekend that includes Oracle as the trusted technology partner,” Mnuchin told CNBC. “There has always been a critical factor for us driving national security is making sure the technology on American’s phones is safe.”
But Washington would push Oracle to make sure code for the app was secured to protect US citizen’s data, Mnuchin told CNBC, adding he suggested that TikTok Global become a new company with prospects of tens of thousands of jobs.