Investors sent Twitter’s share price plummeting 20 percent in midday trading after takeover rumors fell flat leaving Salesforce as the last serious contender.
The social media company took investors on a roller coaster ride with shares jumping more than 20 percent on September 23 after news broke that Google was a suitor. However, Recode reported on Wednesday that Disney, Google and Apple probably would not bid for Twitter. That leaves Salesforce, whose CEO Marc Benioff has called Twitter “an unpolished jewel”.
Shareholders in Salesforce were not pleased with Benioff’s enthusiasm with stocks plummeting 7 percent Tuesday morning. Here’s a look at where the buyout candidates now stand on the Twitter deal.
1. Salesforce’s Marc Benioff Believes Twitter’s “Treasure Trove” of Data Could Help His Enterprise-Minded Company
Salesforce set off the bidding process when it approached Twitter recently, reports the Wall Street Journal. CEO Marc Benioff is a big believer in Twitter even if his company’s investors aren’t. Benioff said Twitter’s treasure trove of data can provide valuable insights on consumer behavior for the cloud-based services company. At an investors meeting on Wednesday, Benioff tried to persuade investors of Twitter’s value to Salesforce, reports the New York Times.
“This is a huge messaging and communications service,” Benioff said on his way to the investors meeting.“I use mergers and acquisition activity to think about the market.”
With Salesforce’s push into artificial intelligence, a Twitter acquisition might make sense for analyzing large amounts of data. At its 2016 Dreamforce conference, Salesforce showcased Einstein, an artificial intelligence built into its customer relationship management platform.
Additionally, Salesforce may find use in Twitter to drive its marketing efforts. The company already owns a social media analysis tool Radian 6 that shifts through large amounts of social chat. Twitter’s broadcasting platform may provide the company’s enterprise customers with an additional tool to reach users.
However, if Tuesday’s big bite out of the Salesforce stock price was any indication, investors have little appetite for the venture. Twitter’s price tag of $20 billion would account for more than one-third of Salesforce’s market cap.
2. Google Rejects a Twitter Buyout After Asking its Banker to Consider a Takeover Bid
Google’s parent company Alphabet Inc. had its banker Lazard look into a Twitter bid. Google has not had much luck in mastering social media. Ever heard of Google Plus, the social network Gmail users have access to? According to a 2015 independent study, 90 percent of people with a Google Plus account have never posted on the social network. Sources familiar with the Twitter deal told Recode that Google is not interested in a takeover.
If Google wanted to take another stab at Facebook, a Twitter acquisition might make sense. However, Facebook already has a 1.71 billion monthly active users compared to 313 million for Twitter as of the summer. So far, Google seems content with partnering with Twitter to show individual tweets in search results. Even for a company with a $544 billion market cap, a acquisition in the $20 billion range is on the pricy end. In 2011, it bought smartphone software company Motorola Mobility for $12.5 billion in its biggest acquisition. Google sold Motorola in 2014 to Lenovo for $2.9 billion.
3. Facebook Unlikely to Bid Even Though an Acquisition Could Bolster its Breaking News Platform
Facebook already offered to buy Twitter back in 2008 for $500 million. The startup was still five years from going public, but early investors thought the site had room to grow, and passed on Facebook’s offer. It’s good they did too, as Twitter rocketed to a $15 billion market cap. With a stagnant user base in the U.S., however, Twitter may reconsider an offer from Facebook.
Despite broad differences in the two social networks – one is a broadcasting platform, the other a social circle for friends – they share similar goals. Both Twitter and Facebook are diving into live video. Facebook announced Facebook Live in April, a live video broadcasting tool, while Twitter has Periscope and made a deal with the NFL to stream Thursday Night Football games. Facebook might also use Twitter to supplement its Trending Topics section, which has been enveloped in controversy.
At the end of the day, the ever present mudslinging on Twitter – check out the twitter feeds of Hillary Clinton and Donald Trump – may scare off Facebook.
4. Disney has Crossed Out Twitter as a Possible Acquisition
Disney is no longer interested in buying Twitter, according to Recode. One of the biggest media companies in the world, Disney may have seen an opportunity to extend its digital arm in Twitter. The number of hours people aged 18 to 24 watch TV has steadily declined to around two hours a day, according to MarketingCharts. That’s bad news for Disney broadcasters like ESPN and ABC.
However, Twitter may not be the right fit for Disney for the same reason as Facebook. The home of Mickey Mouse may not be privy to putting up with Twitter trolls.