TakeoverDate Published: 2016-09-30
Author: Ophir Gottlieb
Twitter Inc. (NYSE:TWTR) is now fully a takeover rumor stock, and it appears that Google is getting closer to making a bid.
Twitter Inc. stock has been on a roller coaster ever since news bombarded the market of a possible takeover bid from several companies including Disney (NYSE:DIS), Verizon (NYSE:VZ), Salesforce.com Inc. (NYSE:CRM) and of course, Alphabet Inc. (NASDAQ:GOOGL).
Verizon quietly stepped away from the limelight, but Salesforce.com Inc. did not. Then rumors came about that Disney was working with Bank of America for a potential bid. The Alphabet Inc. Google story stayed pretty quiet, until now.
Bloomberg has reported that Google is now working with a financial advisor to prepare a bid for Twitter Inc. Google has chosen Lazard Ltd, according to Bloomberg, but the hire was for an exploratory view, rather than a hard and fast bid.
In English, like Disney and Salesforce.com Inc. have been rumored, Google is kicking the tires, or in less opaque words, is valuing Twitter as entity if it were to be enveloped.
Twitter has reportedly hired Goldman Sachs to do its M&A work and a $30 billion valuation was floated by the company as a 'fair price.' If we turn that $30 billion number into a stock price, we get about $42, or about 90% higher than the close on Friday, which is already 20% higher than when these rumors started.
Twitter Inc. may believe that's its value, it may be trying to dissuade a bid, or it may just be gamesmanship. We will never really know, until... we do.
For now, owning Twitter stock has been a little bit like Alice falling down the rabbit hole in Wonderland -- we never really know where it's going to land. But, of all the reported bidders in play, Google does make a lot of sense given the deep inroads the two companies have made as partners, and their uniform competition with Facebook Inc. (NASDAQ:FB).
The author has no position in Alphabet Inc. (NASDAQ:GOOGL) and is long shares of Twitter Inc. (NYSE:TWTR).
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