Every few years for the past two decades or so, a similar situation has played out at Twitter. The company gets into a bind and needs to consider selling itself. In the mid 2000s, Twitter entertained approaches from Yahoo and Facebook. Then, a few years later, an outreach from Google, and, in 2016, a Disney offer. Facebook’s $500 million proposition probably stands out the most, since it was the most considered of the lot, arriving at a time when CEO Jack Dorsey had just departed (sound familiar?) and questions swirled around whether the company would ever live up to its economic potential.
“All of the acquisition events for Twitter have always been around other board drama or changes in CEO leadership, like, you know, the one that’s happening now,” recalls Jason Goldman, a founding executive at Twitter. He spent almost a decade on Twitter’s board and was there for the Yahoo, Facebook and Google bids. “Twitter has the kind of cultural resonance that much larger companies wish they had, a bigger cultural footprint than the size of the business suggests,” Goldman says.
Today, Twitter’s back in trouble, and maybe it’s time to add another would-be suitor to the list, like say, Microsoft or SalesForce. Let me explain: Twitter right now has an untested new CEO, Parag Agrawal, trying to make the business grow—to mend that gap between commercial potential and cultural significance. He’s contending with the advances of the world’s richest person, Elon Musk. Musk wants to buy Twitter for $54.20 a share, a modest premium over where the stock has traded recently, valuing the company at $43 billion. (It is delivered in classic Musk fashion: “420” at the end of his share-price figure is a deliberate reference to April 20, a day marijuana enthusiasts view as a holiday.) In making his overture, Musk expressed skepticism about the company’s current management. He said he wanted Twitter to be “the platform for free speech around the globe” and added: “I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”
Twitter might not want to sell itself it to Musk, but it could soon find itself running short on options for fending him off. And if Musk doesn’t complete the deal, he may have unintentionally opened the door for other acquisitive parties to wander in and launch their own bids.
Twitter doesn’t have the protection offered by the dual-share classes that Meta, Snap and Alphabet have, which prevent raiders showing up on a corporate doorstep. Twitter could adopt a poison pill strategy, selling stock at a discount to dilute Musk’s stake. In doing so, Agrawal might walk away with control of Twitter, but it’s unclear how much of Twitter might be left after such a share sale puts a dent in the company’s market value.
To escape from Musk, Twitter may need what’s called a white knight in the buyout game, a well-capitalized suitor it can live with more easily than the mercurial electric-car mogul. The most famous example of such a strategy was Warren Buffett’s 1989 saving of Gillette, when he bought $600 million of preferred stock to end a hostile takeover attempt by Coniston Partners.
Buffett’s not coming into play with Twitter. In fact, when you consider who might be able to ride to the rescue for the social media platform, it’s a pretty short list. Consider past suitors. Facebook/Meta is likely out because it’s the subject of an ongoing antitrust investigation by the Federal Trade Commission. Likewise Google, which faces its a Justice Department review. Yahoo? Not likely. Disney certainly has the money and likely wouldn’t encounter much flack from regulators. But Bob Iger, the Disney CEO who thought about buying Twitter, is gone, and he had nothing good to say about almost buying Twitter in his 2019 memoirs.
“Twitter was a potentially powerful platform for us, but I couldn’t get past the challenges that would come with it,” Iger writes. “They included how to manage hate speech, and making fraught decisions regarding freedom of speech…and the general rage and lack of civility.” (Many of those problems still plague Twitter today.)
OK, so who might bail out Twitter? Here’s the thinking from Wall Street: Salesforce could afford it and co-CEO Marc Benioff once gave purchasing Twitter serious consideration before changing his mind. Salesforce’s other co-CEO, Bret Taylor, is certainly familiar with Twitter. He’s actually the chairman of Twitter’s board. But it’s unclear whether that would make Salesforce more or less likely to pursue Twitter.
PayPal is a dark horse contender after chasing, then ditching, a $45 billion deal for Pinterest last year. Though the PayPal-Pinterest tie-up made more sense when you thought about Pinterest less as a social network than a social shopping site—with PayPal having plenty of insight about checkout transactions.
Another likely contender seems like Microsoft, Wall Street sources say. The company declined to comment about whether it was actively considering jumping into the Musk-Twitter fray. Of course, it has signaled a desire to buy a social media company quite recently. In 2020, it enthusiastically pursued a roughly $50 billion acquisition of TikTok, losing out only because of interference by the Trump administration. Moreover, Microsoft’s $26.2 billion purchase of LinkedIn has already proven it can turn a quixotic social network into a money machine. LinkedIn revenues have grown from around $2 billion in 2016 when Microsoft purchased it to over $8 billion, according to Statista, a data analytics firm.
“Microsoft has added a tremendous amount of value to Linkedin,” says Brent Thill, an analyst at Jefferies. “And if you think about it, Microsoft would add professionalism. trust and respect.” True enough: a Microsoft offer probably wouldn’t come partly framed as a reference to weed culture, which, oddly enough, counts as only the latest strange development in Twitter’s tortured history with trying to sell itself.
social experiment by Livio Acerbo #greengroundit – original source here