Twitter Inc (TWTR) Paid $479M For TellApart, Not $533M

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Twitter Inc was believed to have paid nearly $533 million for the ad tech business TellApart in April 2015, making it its biggest acquisition. But a 10-K filing reveals that the amount actually paid was $479 million. It is nearly $54 million lower than what was earlier thought with about $395 million of that recorded as goodwill.

Dropping stock price to blame

Due to Twitter’s dropping stock value and the fact that the deal was mostly done in shares, the final price was reduced to this amount. The micro-blogging firm paid $22.6 million in cash for TellApart and a further 12.2 million shares of its common stock valued at $456.5 million. This excludes the shares and options for employees who came over with the deal.

Twitter’s stock value was $42.27 at the time of the deal in April 2015, and the deal was originally for 12.6 million shares. It appears that the share number declined to 12.2 million by the time the deal closed in the following month, says a report from TechCrunch, though the decline wasn’t much if we compare the current stock price of around $18.

Twitter has been trying to turn around its business by bringing out features and methods to attract more users beyond its exiting community of occasional Tweeters/Lurkers and die-hard heavy users. The TellApart acquisition is part of those efforts, and it was made when Dick Costolo (who too invested in TellApart) was Twitter’s CEO.

TellApart already contributing to Twitter revenues

Twitter’s interest in the company is just to create more revenue, so it doesn’t matter what changes may be underway in the consumer-facing non-ad product. The social media firm uses TellApart’s technology in retargeting services, tracking ads and users across the web and mobile platforms both on the platform and other medias, and to ensure that those who purchase through the ads on Twitter get noted.

From $11.4 million in 2014, ad revenue from services on third-party websites was up to $194.2 million in 2015, indicating that TellApart could be paying for itself in a short time. Of the eight acquisitions made public last year, the company singles out only four acquisitions in the 10-K form.

The four acquisitions together (which were not individually named) accounted for a total purchase price of $118.9 million, with common stock worth $60.1 million and $58.8 million in cash. Overall, 2015 was Twitter’s biggest year in terms of acquisition values.

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