Twitter Moving Closer to Sale
The social network site Twitter is talking with Salesforce.com, Google and others over a possible takeover of the company, people briefed on the discussions said on Friday.
The discussions are in the early stages, these people said, and there is no guarantee that a deal will be reached.
At the same time, Twitter is weighing a possible revamping of the company that could involve divestitures and layoffs. The company is working with the investment banks Goldman Sachs and Allen & Company on its options.
Twitter, which has 313 million users worldwide, is considering such transformative steps as it wrestles with a slowdown in its growth.
Shares of Twitter, which is based in San Francisco, surged after CNBC reported that the company had received takeover interest. In afternoon trading on Friday, Twitterâs shares were up nearly 20 percent.
Credit Drew Angerer/Getty Images
That pushed its market value up to $ 16 billion, its highest level since early January. Nonetheless, the stock was trading below the price at which Twitter went public â $ 26 a share â in November 2013.
A representative for Twitter declined to comment.
Google did not immediately respond to a request for comment.
âWe do not comment on rumors and speculation,â said a Salesforce spokeswoman, Jane Hyne.
Since its splashy debut on the public markets, Twitter has struggled to grow while battling competition from rivals old and new. Facebook â and its suite of offerings like Instagram, WhatsApp and Messenger â has continued to outpace Twitter in user growth and profitability, while the five-year-old Snapchat has become the newest darling of the social media world.
Lack of growth has begun to eat away at advertiser demand, which had remained robust even as Twitterâs overall number of users stagnated. Advertisers aiming for big audiences tended to choose Facebook, while those looking for younger audiences have the option of Snapchat.
Twitter has begun a turnaround effort built on video and live streaming video in the hopes that users will flock to the service to watch sporting events and news.
Wall Streetâs Reaction to Twitter
This month, Twitter unveiled a free app for Apple TV, Amazon Fire TV and Microsoftâs Xbox One that will include live streams of 10 National Football League Thursday night games, and all live videos from MLB Advanced Media, the National Basketball Association, Pac-12 Networks, Campus Insiders, Bloomberg News and the business news start-up Cheddar.
The company also shifted its focus to selling more premium video ads.
Salesforce has publicly expressed interest in owning a social network, which the company believes can bolster its main business of selling software and service to business clients. Salesforceâs chief executive, Marc Benioff, conceded this summer that his company had bid aggressively for the business-focused social networking site LinkedIn, which instead sold to Microsoft for $ 26.2 billion in June.
Though Salesforce itself declined to comment on any discussions with Twitter, its chief digital evangelist, Vala Afshar, posted on Twitter some of the attractions that a deal might have for his employer. Among them: Twitterâs âpersonal learning network,â âthe best real-time, context-rich news,â âdemocratize intelligenceâ and âgreat place to promote others.â
Shares of Salesforce slumped more than 5 percent on Friday.
Twitter has been the subject of takeover speculation for several years, with Google often cited as the most logical buyer. Media companies have also been considered possible suitors. That chatter heated up after Microsoft bought LinkedIn in June.
And compared with its social media and internet peers, Twitter is more susceptible to a takeover because it has only one class of stock. Companies like Facebook and Googleâs parent, Alphabet, have multiple classes of shares, which gives their founders tight control over their companies and guarantee independence.
Twitter has $ 3.6 billion in cash on hand and $ 1.6 billion of debt, according to Standard & Poorâs Global Market Intelligence. Microsoft paid a premium of nearly 50 percent for LinkedIn, although a sale of Twitter is unlikely to bring such a rich price.