Suitors include Google and Salesforce.com with the former being a market favourite.
According to a source who is familiar with the matter at hand, Twitter Inc. has initiated talks with several tech company in a potential bid to sell itself.
Twitter’s sale has been an on & off topic in the grapevine since many months now. The company has been grappling with the twin issues of stagnant user growth and plunging advertisement sales which have resulted in the entity becoming a money losing venture to the tune of millions of dollars a year.
Despite the decade old company becoming by itself a potent source for global news, social commentary and entertainment, the company is facing significant struggles.
Citing anonymous sources, CNBC has reported that Twitter is in talks with several companies, which includes Google Inc., and is set to receive formal bids for its acquisition soon.
Furthermore, another anonymous source has told Reuters that Salesforce.com is also in the race for its acquisition.
Nor Alphabet, Google’s parent company, not Twitter responded to requests for comments. As for Salesforce, it declined to comment.
Media reports have also reported that Verizon is a potential suitor. Verizon has said it does not comment on M&A rumours. It did however say that it has not submitted any bid for the company, yet.
With the news of its potential sale hitting the market, Twitter’s shares jumped by 19% $22.22 per share on Friday. This marks the largest one-day rise since its first day of trading in 2013.
Twitter’s market value is around $16 billion.
Analysts weigh in
According to Ali Mogharabi, an analyst at Morningstar, Alphabet would be the best suitor since Twitter on its own has been unable to make a mark on the social media on its own despite its significant efforts.
“From a strategic standpoint, we think it would be more beneficial for Alphabet as opposed to Salesforce,” said Mogharabi.
Omid Kordestani, a former Google executive is the executive chairman at Twitter.
According to sources familiar with the matter at hand, Allen & Co and Goldman Sachs are Twitter’s advisers in this potential sale.
SALESFORCE’s interest in Twitter
Salesforce.com’s interest in potentially acquiring Twitter is pretty unusual and unexpected. Salesforce’s speciality likes in delivering cloud computing services and has zero presence in consumer media.
However, its “Einstein” AI platform, which it recently showcased, has provided a glimpse at how Twitter could fit into the company’s overall scheme of things.
As per Salesforce’s executives, they route all tweets through the platform and use it to create a sentiment analysis. Other tools are also used to show and bring clarity on how companies and their brands are perceived by consumers.
Incidentally, Marc Benioff, Salesforce’s CEO is pretty active in political causes in San Francisco and both companies are located just blocks from each other.
Vala Afshar, Salesforce’s chief digital evangelist, had tweeted on Friday saying, “Why @twitter? 1 personal learning network 2 the best realtime, context rich news 3 democratize intelligence 4 great place to promote others.”
He later appended the tweet with another stating, “I have tweeted my personal views regarding ‘Why Twitter?’ numerous times over the past couple of years. I simply love Twitter.”
Bleak performance
Afshar’s sentiment does not find common ground on Wall Street. The company has failed to meet the first and the second quarter expectations this year, and has yet to produce a net profit in 11 quarters, as a public limited company.
At the end of 2016’s second quarter, Twitter has an accumulated loss of $2.3 billion, since its inception.
Twitter has also failed to keep up with rivals including Instagram, Facebook and Snapchat. Despite being relatively new on the scene, all three have begun monetizing their ad revenues.
When Twitter went public in November 2013, its share price was $26. A month after the IPO they rose to their historic high of $74. However, ever since they have plodded a downward trajectory. Thursday’s close was at $18.63, although on Friday with the news of its potential sale leaking out, its share prices jumped to $22.22.
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