Will Twitter be snapped up by a larger corporation later this month? Rumors regarding a takeover of the popular but struggling social media giant have been circulating for the best part of the year.
Following two consecutive quarters of stagnant user growth, Twitter is reportedly set to evaluate formal acquisition bids on October 27 in an effort to ease its investors’ concerns over its shrinking stock price. That same date will also mark the release of the company’s third quarter earnings, revealing whether its big gambits on live video and changes to its core tweeting experience have paid off.
Despite reports of initial interest from Google, Salesforce, and Disney, recent speculation has dashed almost all hope of any of those companies putting forward a bid. Meanwhile, internal rumblings suggest that Twitter itself could be divided on the issue of a takeover. Twitter has thus far refused to comment on what it terms “rumor and speculation.”
As the all-important date draws ever nearer, we’ve compiled the essential roundup of all the major news around the tech acquisition that has everyone talking.
Softbank speculation gives Twitter stock much-needed boost
It has been all quiet on the Twitter front since last week, when Salesforce confirmed it was definitely not interested in the social platform. Like a lonely teen without a prom date, Twitter was left to its own devices, and perhaps that’s exactly what it wanted.
Alas, in the world of tech takeovers, there’s always a chance you may find a new beau, one who cherishes you despite your run of bad luck — just ask Yahoo. And so we have renewed interest in Twitter, this time from Japanese telecom giant Softbank, best known in the West as Sprint’s parent company. It must be noted, however, there’s no real evidence the company is genuinely mulling an acquisition. Yet the mere mention of a possible bid has sent Twitter’s stock up by 6 percent.
Unlike Salesforce, Softbank isn’t short on cash. The company already made a significant acquisition earlier this year, when it snapped up United Kingdom chip manufacturer ARM for $31 billion. It is also reportedly planning to launch a $100 billion tech fund in partnership with the Saudi Arabian government, reports Forbes. Interestingly, Saudi Prince Al-Waleed bin Talal Al Saud is Twitter’s second-largest individual shareholder, and has been linked to a takeover (in partnership with fellow Twitter investor, and former Microsoft CEO, Steve Ballmer) in the past.
Softbank may also be interested in the platform due to its popularity in Japan, where it commands a larger user base than Facebook. At last count, Twitter reportedly had 35 million users in the country.
Will it be a case of Softbank saving the day for Twitter? We may not have to wait much longer to find out.
Salesforce is reportedly out
Salesforce is no longer interested in acquiring Twitter. The software company’s CEO Marc Benioff confirmed the news to The Financial Times, stating: “In this case we’ve walked away. It wasn’t the right fit for us.”
Until now, Benioff was in opposition to investors who were rallying against a takeover, but it seems the negative feedback was too much to ignore.
Twitter’s shares have dropped 5.7 percent to $16.77 as markets reacted to the news, which leaves the company stranded without a bidder in sight. On the other hand, Salesforce has seen its shares rise 6.5 percent to $75.23.
Those closely watching the deal were never convinced Salesforce would actually swoop in to buy Twitter. The company, which commands an 18.4-percent share of the customer relationship management (CRM) market, has cash reserves around half of Twitter’s current market capitalization (notes TechCrunch). By most accounts, Salesforce simply couldn’t afford to acquire the social platform. However, it was previously reported that the company was considering whether to place a lowball offer for Twitter based on its declining share price.
You don’t know Jack
Last week marked the first anniversary of Twitter CEO Jack Dorsey’s return to the company. It also brought with it a troubling report claiming that Dorsey was at odds with the Twitter board, and fellow co-founder Evan Williams, regarding the future of the platform.
Dorsey is reportedly adamant that Twitter should remain independent in order to reap the benefits of recent improvements to its core experience and live video. In response, the Twitter board is consulting with external advisers on how to deal with the internal disagreement, having already decided to evaluate formal takeover bids later this month.
On the surface, Dorsey seems unfazed by the chatter, which is increasingly focussing on his management of the company during this crucial juncture in its decade-long history. In an internal memo sent to staff members last week, Dorsey reportedly made no mention of a possible acquisition, and instead offered words of motivation for his team.
“We’re only limited by our sense of urgency…The people who use Twitter every day deserve our best. They are why we’re here,” writes Dorsey in the memo obtained by Bloomberg. ”So let’s show them what we’re made of and deliver a better Twitter faster than they thought possible. We can do this every day. We can do this!”
Is the memo just a case of damage control following the disappointing reports of a lack of interest in the firm? Or a bid to increase staff morale and faith in Dorsey’s leadership? It’s probably a bit of both. To many onlookers, Dorsey may appear to be a man out of time. To his credit, as CEO, Dorsey has attempted to define Twitter’s brand — an issue that troubles marketers and analysts alike. If he ends up losing the battle for his company’s independence, another firm will inherit the same problems. In Dorsey, they may have the one person who can help them to grasp the challenges they face.