After the session ended on Wednesday, reports state that Alphabet’s Google “does not currently plan to make a bid” for Twitter Inc (NYSE: TWTR). The news also indicated that Apple Inc., was also unlikely to bid for the microblogging titan. So the question is: Who will acquire Twitter?
Twitter shares edged higher by 5.7 percent in regular trading hours after reports came out that the microblogging company is anticipated to deal with offers this week and that Salesforce.com—a cloud CRM software firm—is seeking to bid. The shares of Salesforce slumped by 5.8 percent, as the investors of the CRM software provider once again expressed their disapproval to an agreement with Twitter.
It is important to take note that the TWTR stock is still trading higher by 21 percent from its close on September 22, which marks the date that the initial reports that the microblogging corporation is open for an acquisition deal.
Aside from Salesforce, Walt Disney has also been frequently reported to be interested in the company. Microsoft, which is set to acquire LinkedIn for approximately $26.2 billion, was reported to show interest in Twitter as well. However, the software giant has not been stated in latest news reports.
Shortly after the news came out that Google will not purchase Twitter, Reuters stated that the microblogging company “has told potential acquirers it is seeking to conclude negotiations about selling itself” before the release of its financial results for the third quarter. The Q3 earnings report is scheduled to be announced on October 27. Moreover, Twitter also told potential buyers that “binding acquisition offers” are due within 2 weeks. Because of this, speculation arose that the earnings results and guidance of the microblogging firm won’t be that good.
At present, the company has estimated that sales will go up by just 4 percent to 7 percent annually in the third quarter. During the second quarter, the sales grew by 20 percent, and 36 percent in the first quarter. Meanwhile, Twitter’s sales grew by 48 percent during the fourth quarter of the previous fiscal year.
RBC Capital Markets downgraded the TWTR stock and stated that the ad sales momentum of the microblogging platform has further softened in the recent months. The investment bank released this report just before the initial reports came out that Twitter is up for sale.
Twitter offers clear synergies for the news, search, display ad, and mobile efforts of Google. Furthermore, of all the rumored potential acquirers, Google has the deepest pocket.
Yet, Alphabet has displayed more financial wisdom under the current Chief Financial Officer Ruth Porat. Ms. Porat was hired from Morgan Stanley just last year. Between the recent problems of Twitter and the fact that it still has a valuation of more than $15 billion, Alphabet may have opted to pass when it comes to acquiring Twitter.
Furthermore, since there are persistent questions regarding how well the microblogging company would fit either Disney or Salesforce and how shareholders in the mentioned companies would react to any acquisition agreement, markets are rebalancing the odds that they are giving Twitter in terms of receiving a huge buyout offer.