Twitter said to work with Goldman amid informal sale talks

Twitter's stock has fallen after several quarters of slowing growth, putting it in play as a potential takeover target.

Sarah Frier, Alex Sherman, Brian Womack
First Published24 Sep 2016
Twitter is still attractive because of its data, user base and influence in politics, culture and the media. Photo: Reuters<br />
Twitter is still attractive because of its data, user base and influence in politics, culture and the media. Photo: Reuters

San Francisco/New York: Twitter Inc. is holding informal talks with several potential buyers and is working with Goldman Sachs Group Inc. to help with a possible deal, people familiar with the situation said. Inc. is one of the main parties interested in the San Francisco-based social media company, said the people, who asked not to be named because the information isn’t public. Twitter is also working with Goldman on options besides a full sale, like a divestiture of non-core assets, one of the people said.

Twitter’s stock has fallen after several quarters of slowing growth, putting it in play as a potential takeover target. The company is still attractive because of its data, user base and influence in politics, culture and the media.

Twitter recently expanded into live video streaming, making it possible for some users to watch National Football League (NFL) games for free, with Tweets related to the game appearing alongside the video. It’s making similar deals for content related to politics, business and entertainment.

Twitter co-founder and board member Evan Williams fueled takeover speculation last month when he said in an interview that the company has “to consider the right options.” He was responding to a question on Bloomberg about whether Twitter can remain an independent company.

Twitter shares surged as much as 23% to $22.89 on Friday after CNBC the company has received expressions of interest from several technology or media companies and may get a formal bid shortly. The stock closed at $22.62, up 22%.

Salesforce earlier this year unsuccessfully bid to acquire LinkedIn Corp., and Twitter could provide similar benefits. Though Twitter is typically considered a consumer product, the social media company’s 313 million monthly active users include many professionals — people who Salesforce customers already may be targeting for potential deals. It’s data may help improve the Salesforce software that companies use to manage customer relationships.

More than 70% of sales professionals use social selling tools, including LinkedIn, Twitter and Facebook, to help close a deal, build stronger relationships and expand revenue, according to a LinkedIn report. And Salesforce itself in 2014 said Twitter was the “largest cocktail party in the world,” according to a post on its website.

Twitter may appreciate merging with a technology company as opposed to a media company, where it may have conflicts over content. 21st Century Fox Inc., Comcast Corp., Time Warner Inc. and AT&T Inc. are not interested in buying Twitter, according to people familiar with those companies’ strategies. And any acquirer would face challenges turning Twitter around, or molding its strategy to suit new priorities.

“Microsoft’s LinkedIn acquisition has raised speculation of a Twitter takeover, though weakening user metrics and lack of clear strategic buyers suggest it wouldn’t command the same premium,” analysts at Bloomberg said in a note.

Based on the value of Microsoft’s LinkedIn deal, Twitter is worth $16.7 billion, excluding cash, Bloomberg estimated. Twitter share gains Friday left the company with a market value of $16.01 billion, according to data compiled by Bloomberg.

News of Salesforce’s potential interest helped send the software company’s stock down as much as 6%, putting it at its lowest intra-day price since March. Analysts at Stifel argued against a deal in a note entitled “An Open Letter to CRM: You Don’t Need to Buy the Cow.”

“We see little reason why needs to outright own an advertising-driven business model with stagnating user growth and decelerating revenue growth at a price point that would likely be” more than $15 billion, the analysts wrote.

Twitter is often rumored as a takeover target, especially for Alphabet Inc. division Google, which has considered and then decided not to acquire the company over the years.

Google aspires to be the main provider of information, and the rise of social media in the form of Facebook, Twitter, Snapchat and others has created a massive source of new data that is mostly out of the reach of its search engine.

Google already partners with Twitter to show recent tweets in its search results, and has worked to integrate Twitter with its DoubleClick advertising service. Twitter last year added Omid Kordestani, a former Google executive, as an executive chairman of its board.

Representatives for Salesforce, Alphabet and Twitter declined to comment. Bloomberg

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