Twitter Inching Closer To A Sale
Twitter’s (NYSE:TWTR) board has reportedly been considering a sale this month. The microblogging service has reportedly started talks with a number of technology companies to sell itself. Speculation that Twitter would be sold has gathered steam in recent months. Now, sources are saying that a sale could occur in the next 30 to 45 days.
The struggling social network has long been touted as a potential takeover target. In the past, Twitter’s board, including current CEO Jack Dorsey, didn’t want to sell the company. Twitter is currently worth $20 billion due to a rally over the past couple of trading days. If a bidding war breaks out, the board will surely ask for more than that.
Twitter went public in late 2013 at $26 a share, valuing it at $18 billion. Investors bid up Twitter’s price as high as $69 a share. However, the stock sank as low as $14 a share last June on questions about how Twitter would monetize its network and keep users coming.
Quarterly sales have been sluggish to flat and net profit is nowhere in sight. It’s latest quarterly financial update showed a 20 percent year-on-year increase in ad revenue, its smallest gain since 2013. If Twitter has another disappointing quarter, its stock will surely slump again.
Names of potential buyers include Google parent company Alphabet, Disney, Microsoft, Verizon, and Salesforce. A report emerged Monday that Disney was working with an advisor to evaluate a possible bid for Twitter. Disney has had a strong track record of buying properties and seeing them flourish under CEO Bob Iger.
Disney is reportedly considering buying Twitter as a new way to reach a mass audience. Twitter could help Disney transition its cable audience to an online format. Twitter has been moving toward becoming a video platform for some time. Big events are already big draws for Twitter users, so it makes sense for the company to branch out into video.
Google parent Alphabet also remains a strong contender. Google’s massive user data could help turn Twitter into a digital ad powerhouse. In return, Alphabet would get the social network it could never build on its own. Neither Alphabet nor Salesforce have confirmed that they’re working on bids.
Close ties between directors and executives in media and technology may present conflicts of interest for a deal. Such connections are increasingly common, but they require close attention by boards to avoid a breach of fiduciary duties. A board typically forms a special committee to evaluate opportunities when weighing deals. It is not yet know if Twitter has formed such a committee.