Oracle has confirmed it will partner with TikTok U.S., and Nvidia announces it will buy Arm from SoftBank in a $40 billion deal. Yahoo Finance's On the Move panel discusses.
ADAM SHAPIRO: But right now, we've got a lot of deal making in the news this morning, and it's apparently no deal for Microsoft and TikTok. Oracle confirmed within the last hour it is part of a proposal submitted by ByteDance to the Treasury Department to become a, quote, "trusted technology provider." Now, Microsoft issued a statement saying it would not be buying TikTok.
And this is a quote from Microsoft-- "ByteDance let us know today they would not be selling TikTok's US operations to Microsoft. We are confident our proposal would have been good for TikTok's users while protecting national security interests." The Trump administration, remember, has set a September 20 deadline for ByteDance to essentially sell its US operations or risk being blocked here in the USA.
JULIE HYMAN: You mentioned Nvidia as well, Adam. And I just want to run you through the details of that. Nvidia shares, by the way, up about more than 6%, more than 6 and 1/2% right now. This is one of the largest semiconductor deals ever. Nvidia is going to be buying Arm Holdings for $40 billion from SoftBank. It's a cash and stock deal-- $21 and 1/2 billion in stock, $12 billion in cash.
There's the potential for an additional $5 billion payment to SoftBank if Arm hits certain financial targets. And Nvidia is also going to be issuing $1 and 1/2 billion in stock to Arm employees. Masayoshi Son bought Arm for SoftBank four years ago for $32 billion, so not getting much of a premium there. And he struggled with operations at the company.
Nvidia, remember, is a graphics chip maker. Arm makes chips more for smartphones. And there are some questions here about what this is going to do to Arm's client relationships if Nvidia is a competitor to some of the companies that it's also supplying.
ADAM SHAPIRO: And then, of course, Gilead Sciences-- they are buying biotech company Immunomedics. It's a $21 billion deal that will help Gilead expand its cancer treatment portfolio. Now Immunomedics, they make a drug, Trodelvy, which is an FDA-approved treatment for metastatic triple negative breast cancer.
About 15% to 20% of all breast cancers are triple negative and tend to be found in younger women. Gilead chief executive Daniel O'Day issued a statement saying, quote, "this acquisition represents significant progress in Gilead's work to build a strong and diverse oncology portfolio." Gilead chief executive Daniel O'Day saying that in a statement the company issued this morning.
But the real news is TikTok, because the deal's not done yet. It still needs essentially regulatory approval from the US government, as well as from China, which had been essentially slowing down any kind of deal. Let's bring this to the panel and start with Brian. What do you make of this? Would the Chinese agree to perhaps not a sale, but a "trusted technology partner"?
BRIAN CHEUNG: Well, that's the thing, Adam, that you quite rightly point out, which is that yes, we know that Oracle is going to be TikTok's dancing partner here. But we don't know what that dance is going to look like. So when it comes to this TikTok deal, we don't know if it's going to be an outright sale.
Reporting makes it sound like it's not going to be a direct purchase of TikTok assets. Instead, it might look something like a partnership. We haven't heard from either TikTok or from Oracle exactly what that setup is going to be.
Keep in mind that something that developed over the weekend as all this was moving pretty quickly was the news that the TikTok algorithm, which, for example, decides what types of posts you might see on your feed first will not be part of that sale, and that ultimately, TikTok would be holding onto that under whatever holding company structure they have in China. The argument is that that significantly waters down the value of TikTok to any sort of US buyer, which could be behind the reason for Microsoft ultimately bowing out as the final potential suitor here.
So I think there are a number of details that we need to see here. And you also rightly point out, Adam, that this does need to go through the requisite approvals here in the United States. Steven Mnuchin, the treasury secretary, saying earlier this morning on CNBC that the CFIUS Committee, which kind works with these US-China dealings, will have to review that. But he said that there will be a meeting this week to discuss that.
So a number of details to hammer out. But we know it's going to be Oracle. Again, the real tell here is going to be what the final details of this transaction ultimately look like.
JULIA LA ROCHE: Yeah, Adam and Brian, I think that's key, is the details. And it's still very much too early here to really make a proper assessment. But you are starting to see the sell side, some of the sell side research analysts come out with notes as to what this deal could mean.
I just want to reference one that came out just moments ago from Bank of America. And they're basically saying that this partnership structure could be much better than an outright acquisition. And they specifically say a partnership structure, where Oracle does not acquire the underlying algorithms and instead takes a stake and handles cloud services, security, and privacy, would likely be more palatable to investors than an outright acquisition.
Elsewhere in the note, they talked about hypothetical TikTok monetization. They said that the base case here could be $630 million in revenue, up to $6 billion, according to this note. And they were referencing just kind of a comparison to the average YouTube revenue, I guess for making their base case here. But they certainly say Oracle could generate $630 million in revenues in their base case. So pretty interesting when you start to see the sell side step in here and start to kind of assess what does this mean and what could it mean financially for Oracle should the deal go through.
JULIE HYMAN: I think the "should the deal go through" is still a big and an interesting question. Even if it does go through, I think that the sort of assessments of how this was handled and what it means for future deals and other future sort of government intersection with this kind of private transaction-- as we know, Larry Ellison is someone who has donated to President Trump's campaign and have been a supporter of his in the past. So there's been speculation about whether this was a factor in Oracle winning this partnership. So I think that's something that deserves further scrutiny here as we continue to assess this deal, partnership, whatever you want to call it, whatever it turns out to be.