The Strategist

Why is the Twitter sale 'almost dead'?


10/10/2016 - 15:51



The most probable buyers of Twitter, namely Walt Disney, Salesforce.com and Google, may refuse to sign the deal because of pressure from their investors, Bloomberg writes.



Howard Lake
Howard Lake
Prospective takers of Twitter buyers are losing interest in the deal due to pressure from their investors – Bloomberg quoted sources familiar with the situation.

The Agency says that Twitter’s sales is "almost dead" now. The acquisition was interesting to Alphabet (Google parent company), Salesforce.com, and Walt Disney. Earlier, they consulted with banks to discuss possibility of acquiring a social network. Now, according to sources, they are unlikely to make such a move.

The agency’s interlocutor says that some of Salesforce’s investors expressed their dissatisfaction with the CFO Mark Hawkins and other leaders about possible purchase of Twitter. Some investors also sent a letter to Hawkins, in which they explained their views on this issue.

Salesforce’s spokesman said the company does not comment on rumors. Representatives of Twitter, Google and Walt Disney declined to comment.

According to Bloomberg’s sources, now Twitter is considering other options, such as sale of non-core assets.

Past Thursday, Reuters, citing informed sources, reported that Twitter intends to stop negotiations on the sale by October 27, that is, date of publication of the third quarter report. The parties claimed that the company has already identified a range of potential buyers. Salesforce, Alphabet and Walt Disney were specified among them, the agency wrote.

However, later it was reported that Walt Disney and Google expressed reluctance to make binding offers for deal. After that, Twitter’s shares fell more than 18% during premarket trading on the stock exchange NASDAQ. Analysts at Northman Trader then assumed that if potential buyers refuse to buy Twitter, its share price will fall to $ 14-19 per share.

Twitter announced its intention to sell the company in early September. Recode reported that value of the deal, according to preliminary data, was estimated at $ 18 billion. List of the possible contenders for the purchase included Alphabet, Apple and billionaire Rupert Murdoch with his media holdings 21st Century Fox and News Corporation.

Last year, Twitter’s founder Jack Dorsey returned to his post of general director after an eight-year break. Then, Twitter tried to strengthen the advertising business by improving the video service, as well as to cause number of new users to rise by simplifying work with the microblogging service. Dorsey nudged Twitter to buy a video broadcast system Periscope and startup Magic Pony, develops a system of artificial intelligence to analyze pictures. In October, Twitter users were offered a new function Moments, designed to organize themed tweets and published photos and video. In mid-September, Twitter launched a live broadcast of the National Football League USA. During game of New York and Buffalo, Twitter fixed an average of 243,000 viewers per minute. However, the service still was far behind the traditional channels: CBS broadcast, for example, gathered 15.4 million viewers per minute.

Diversity of Twitter’s potential buyers shows how differently they could use the social network. Salesforce develops cloud customer relationship management systems (CRM). Its interest in Twitter shows value of one of Twitter’s main assets, possibility to inform millions of customers in real time. Sales professionals could derive very valuable data about their target audience from the social network. In addition, integration with Salesforce’s opportunities would create even more useful tool to identify range of potential customers, said Martin Utreras, a chief analyst at eMarketer (quoted by Financial Times).

Unlike Salesforce, deal with Twitter would produce an immediate effect for Google. The company could find this asset more valuable than most other potential buyers, as Twitter could complement the company’s existing services, FT quoted Brian Wieser, an analyst at Pivotal Research. Google can just fill Twitter with its own advertising, says Wieser. After that, the social network will become a new growth point of its advertising business, which is now barely shifting from desktop computers to mobile devices.

source: bloomberg.com, ft.com




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