Could Twitter Inc (TWTR) Be A Plausible Victim Of Hostile Takeover By Either Google (GOOG) Or Facebook (FB)


When the name of the company is Twitter Inc (NYSE:TWTR), rumors can be almost about anything. At some point it was rumored that the microblogging CEO’s Dick Costolo was due to step down almost immediately, but Costolo still runs the company to-date as CEO. Rumors also emerged that perhaps Google Inc (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL) or Facebook Inc (NASDAQ:FB) are seriously pursuing Twitter for takeover, but nothing has happened to this day. However, rumors have not ceased, they have only grown.

Currently, rumors point to unsubstantiated chatter that two companies, of which one is said to be Google and the other Facebook, are seriously interested in taking over Twitter. There are also reports that Twitter has reached out to advisers at Goldman Sachs Group Inc (NYSE:GS) to help it put off possible hostile bids. The report excited Twitter shareholders, leading to a decent uptick in the stock price.

The two main reasons Twitter acquisition rumors have kept coming up are the slow growth of the company and falling stock prices. CEO Costolo has come under investor attacks, especially as new user acquisition appears to be cooling.

Management challenges

Since its founding in 2006, Twitter Inc (NYSE:TWTR) has seen more executive heads rolling than its main rival Facebook. The company has been through three CEOs and almost an equal number of product leaders in just about 18 months. There have also been tense departures of key figures, which have, in their wake, triggered more departures at different levels of management. Management instability is something that a potential acquirer could exploit to influence things in its favor.

Slow user growth

Twitter Inc (NYSE:TWTR)’s other problem, that could be exploited by a potential buyer to tilt the balance in its favor, is the slow user growth. The company managed to add just about 4 million new users in the December quarter, a slow growth that didn’t impress investors.

Stock structure

Twitter Inc (NYSE:TWTR) seems to be vulnerable in the stock structure perspective. The fact that the company lacks the so-called ‘dual-class’ stock structure means that it is more vulnerable to hostile bids.

Price tag hindrance

As much as Twitter Inc (NYSE:TWTR) may be weak in many ways, its price tag could be a major challenge for any person or company interested in taking over the microblogging provider. With a market value of more than $33 billion, Twitter is obviously too expensive, but not unaffordable for the likes of Google, Apple and Facebook, that have been mentioned in the takeover rumors. Google has more than $64 billion in the bank and Apple is rich with more than $178 billion.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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