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Twitter's list of possible suitors keeps growing

MoneyWatch 10/5

A sale of Twitter (TWTR) appears to be inching closer to reality.

Offers for the microblogging site, which has been dogged by concerns about its growth for years, are due this week, according to The Wall Street Journal. Alphabet’s Google (GOOG) and Walt Disney (DIS) are said to be among the suitors -- and much to the surprise of many pundits, so is the enterprise software giant (CRM).  

Shares of Twitter have gained more than 25 percent over the last month as speculation about a deal for the San Francisco-based company has reached a fever pitch. They surged another 5.7 percent today to close at $24.87 Officials from Google and Disney couldn’t immediately be reached for comment for this story.  

Salesforce declined to comment ahead of Chief Executive Marc Benioff’s planned question-and-answer session with Wall Street analysts. When pressed on the issue by CNBC’s Jim Cramer this afternoon, Benioff replied that Salesforce “looks at everything” and passes on most deals. He wasn’t more specific. 

Shares of Salesforce pared some of their earlier losses but still closed down 5.8 percent to $68.42. Wall Street analysts have questioned whether the company could afford Twitter, which is seven times as big as Salesforce’s largest acquisition. 

Benioff, though, is said to be keen on Twitter because it has a trove of valuable data and a well-known brand, according to The Journal. His interest in the company caught many Wall Street analysts by surprise. However, Fidelity Investments, Salesforce’s largest shareholder, opposes a Twitter acquisition, according to financial news site Benzinga. A Fidelity spokesman declined to comment.

“The story hit at the end of Salesforce’s investor day, which was very positively received, immediately turning the mood sour for the cocktail reception afterwards,” wrote Ed Maguire, an analyst with CSLA, in an email. “The CFO and head of Finance were open, available and transparent about the business, and while they could make no comment on the potential for a Twitter deal, it’s our impression that this is being driven by Benioff himself, who reportedly calls Twitter an ‘unpolished jewel’ that could be improved with better management.” Maguire rates the shares as a “buy.” 

Twitter has been hurt by turnover in its management ranks. CEO Jack Dorsey helped found the company in 2006 and was ousted two years later after feuding with colleagues. Dorsey returned to run Twitter in 2015, but that raised some eyebrows on Wall Street because Dorsey continued as CEO of payments processor Square (SQ).

Whether Twitter would be better off under either Disney’s or Google’s ownership also is a matter of debate. It has 313 million monthly active users, which is dwarfed by Facebook’s (FB) user base of more than 1.7 billion. Twitter is also being eclipsed by newer outfits such as Snapchat, which Bloomberg News noted earlier this year also has more daily users.

“I think it’s entirely appropriate for Twitter to remain independent,” wrote Wedbush Securities analyst Michael Pachter, in an email. He rates Twitter as “neutral” and doesn’t cover Disney, whose interest he suspects is “pure fabrication. 

“[Twitter’s] service isn’t quite like any other, and other than Facebook, I don’t see them as a good fit for anyone,” he added. “I suppose Google could sell more ads, and there may be some synergies with YouTube, Google, etc., but I really don’t see a fit there.”

The bottom line for Pachter: “Twitter would only be better if the new owner figures out how to attract new users.  Current management has made slow progress reinvigorating user growth, so a change might be good.”

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