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Twitter Sale: Disney, Google Are Out of the Running (Reports)

Disney and Google have decided to not move forward with bids for Twitter, which is hoping to secure a deal to sell itself by the end of the month, according to reports.

Both Disney and Google previously had been reported to be interested in the social-media company. But now, neither one is expected to make an offer for Twitter, according to a pair of Recode reports, citing anonymous sources. Apple also is “unlikely” to make an offer for Twitter, per Recode.

Twitter’s stock was down more than 16% in premarket trading Thursday on the reports.

That leaves Salesforce.com as perhaps the leading candidate to pick up Twitter. The company, which provides customer-relationship and sales management tools, sees Twitter as a goldmine of data for enhancing marketing and sales products. CEO Marc Benioff views Twitter as an “unpolished jewel” with potential to boost advertising and ecommerce revenue for Salesforce.com, the Wall Street Journal reported.

Benioff “simply sees opportunities for Twitter if it were incubated in the right environment, and that synergies related to Salesforce.com’s historical focus on customer journeys may follow after the fact,” Pivotal Research analyst Brian Wieser wrote in a research note. Salesforce.com shares fell 5.8% Wednesday, on investor fears that such an acquisition would damage Salesforce’s valuation.

Twitter is looking to wrap up deal talks before its third-quarter 2016 earnings report, scheduled for Oct. 27 after market close, with “binding acquisition offers” due within two weeks, Reuters reported Wednesday.

Twitter has struggled to grow its user base in recent quarters. Facing declining ad-revenue momentum, it has launched a concerted video-streaming initiative, pegged around the NFL’s “Thursday Night Football” games this season.

For Disney, if it had matched Twitter’s reported top-end $30 billion asking price, the acquisition would be about 19% dilutive to calendar year 2017 earnings, according to Nomura Securities managing director Anthony DiClemente. Other reports have said Twitter is seeking a $20 billion price tag. In any case, Disney would have had to raise debt and/or dilute its stock to pull off a deal for Twitter.

The strategic rationale for Disney was that Twitter would give it a younger, tech-savvy, mobile-first audience for content distribution. But it’s not clear that would be the best route for Disney to expand its digital footprint, according to DiClemente.

“My view is Disney would be better off pursuing content-oriented acquisitions,” DiClemente said. “Put simply, I think Disney is strategically complete.”

Meanwhile, rumors have swirled that Disney may be interested in buying Netflix, which would be an even more expensive deal — far bigger than any in Disney’s history.

Google was said to be interested in Twitter to jump-start its presence in the social-media landscape, after disappointing traction with Google+. Alphabet, Google’s parent, had $78.5 billion in cash, cash equivalents and marketable securities as of the end of June, so it has the financial resources to snap up Twitter. But the search giant would face significant regulatory scrutiny if it tried to buy Twitter, while it has an existing deal with Twitter to include tweets in Google search results.

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