Today, shares of Twitter Inc (TWTR) went up on reports that there were possible bids for the micro-blogging site. Shares of the company were up as much as 10% in NYSE trading on Monday and closed up 6.55% to $17.90. However, the details about the bid are incomplete and there have been numerous rumors about Twitter “about to be bought” over the past few years. Analysts were also skeptical of the news and the future of the company whether purchased or not.
Barclays analysts note that “there are three types of deals that could be considered by third parties with interest in Twitter: a) strategic public acquisition, b) PE cash flow story, and c) strategic private investment. As for a strategic public acquisition, we are skeptical that one of the other large Internet players would be interested in making a bid. Our sense, from recent history, is that companies like FB or Alphabet are focused on acquiring technology or user growth. They look for businesses that can either accelerate a product or business they already invest in or one that has rapid user growth (think Instagram). They aren’t usually in the game of buying struggling assets and trying to turn them around. ”
However, Barclays noted that all three types of transactions would run into issues which makes them wonder whether a deal would take place at all. Specifically the analysts note:
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