The acquisition of a company in business means that one greater firm buys the shares of a less great firm to gain control over it. Buying over half of the target company’s stock or assets permits the acquirer to have a bigger advantage over the targeted firm. There are many reasons a firm may want to gain another company. After Trump threatened to ban TikTok in the United States, Satya Nadella talks to him about acquiring the social media company.
Some of these reasons are such as operating a larger economy of scale, diversification, and a bigger market share. Acquirers may want to increase synergy and reduce costs. In other instances, some companies may want to forcefully acquire or purchase other companies. This is known as a takeover. A merger is when an acquirer and the gained firms mutually agreed to come together to form a new entity.
Here is the case of Microsoft trying to acquire the TikTok firm after President Donald Trump threatened to ban it in the US.
What is TikTok?
Tik Tok is a Chinese social networking platform that Byte Dance possesses. People use the platform to create brief dances, lip-syncs, and entertaining videos. Its creators introduced it 3 years ago for the iOS and Android in markets outside its origin. It became accessible globally after joining with Musical.ly in 2018.
Microsoft Plans On Buying TikTok
There was a blog post saying that Microsoft is continuing with the conversations to buy TikTok in the US. This is after a talk between its CEO and Donald Trump.
The blog post read:
“Microsoft fully appreciates the significance of addressing the President’s concerns. It is committed to purchasing TikTok subject to a complete security review and providing proper economic benefits to the US.”
The blog further says that Microsoft is to act fast to engage in conversations with Byte Dance in a few days.
Besides, the post said:
“The 2 firms have provided notice of their intent to explore a preliminary proposal that would involve a purchase of the Tik Tok in the US. Moreover, in Canada, Australia, and New Zealand, and would result in Microsoft owning and operating Tik Tok in these markets.”
Microsoft did not promise to acquire on its own. It may welcome other investors in America to be involved on a smaller basis.
Donald Trump Threatens to Ban TikTok and Mike Pompeo Views
The US President revealed to the journalists he will allow TikTok prohibition in the United States through an executive order. Mike Pompeo said that there might be a probability of the ban in early July.
The reason for this ban may be because Tik Tok is a branch of the Byte Dance, its parent firm. There were also critics that the firm was in connection with the Chinese authorities. They are comparing Tik Tok to Huawei and ZTE which are China-based. The authorities had initially labeled these 2 Chinese companies as a potential danger to the US National Security.
Message from the U.S General Manager to the TikTok Community
Vanessa Pappas thanked the fans of the US TikTok in a video chat. She says that the company will create over 9000 jobs in the United States in less than 5 years.
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