Twitter’s board of directors is interested in selling the company, but no deal is imminent, CNBC’s David Faber reported. However, according to the report, the discussions have been “picking up momentum” and a deal could be reached by the end of 2016.
With the latest stock jump, Twitter has a market cap of more than $15 billion, and any bid for the company would have to be appreciably above that.
Last month, M&A chatter surrounding Twitter heated up after company co-founder and board member Ev Williams said in an interview with Bloomberg TV that the company would be open to considering a takeover. “We’re in a strong position now, and as a board member we have to consider the right options,” Williams said in the interview.
For Google — which has routinely been speculated to be among the top potential Twitter buyers — Twitter’s more than 300 million monthly active users could give it a foundation to become a more powerful social-media force, after its efforts with Google+ have sputtered. Google definitely has the cash to pull it off. On the other hand, its core business is search, and Google already has a deal with Twitter to incorporate tweets into its search results.
Meanwhile, Salesforce, which provides customer-relationship and sales management tools, reportedly bid for business-networking site LinkedIn before Microsoft clinched a $26.2 billion deal for the company. Twitter would extend Salesforce’s suite of services to provide real-time communication and collaboration between companies and their customers or partners. It could also incorporate Twitter data and analytics into sales and CRM products. And Salesforce CEO Marc Benioff has an acquisitive streak: Last month Salesforce bought Quip, a word-processing app maker, for $750 million.
Salesforce, as we now know, had tried to acquire LinkedIn earlier this year before the social networking company made the $26 billion jump into the arms of Microsoft. While Salesforce and Microsoft sometimes work together, they also compete, and adding Quip into the mix at Salesforce could one way for Salesforce to do that better (and counterbalance the fact that Microsoft is building and acquiring more products that compete with Salesforce on the CRM front).
Twitter has been struggling to show sustained user growth, and the company disappointed Wall Street after reporting second-quarter 2016 results and Q3 guidance that did not meet revenue expectations.
On Thursday, RBC Capital Markets analyst Mark Mahaney downgraded Twitter shares to “underperform” with a price target of $14 per share, because of “our belief that Twitter’s value proposition to advertisers could be waning, based on our recent advertiser survey data.”
According to the RBC survey of over 1,100 advertising professionals, 26% of respondents plan to “significantly” or “modestly” increase their Twitter ad spend vs. 28% who intend to decrease it. “This is the weakest result we have seen and the first time we have seen a negative skew towards spending,” Mahaney wrote.
When ranked against competitors, Twitter was fifth out of seven in terms of return-on-investment to advertisers, behind Google, Facebook, YouTube and LinkedIn, but ahead of Yahoo and AOL, according to the RBC survey.