Walt Disney has had talks about a potential acquisition of micro-blogging site Twitter and is working with bankers to evaluate a possible bid for the social media company, according to a report by the financial news agency Bloomberg.
Some media reports have suggested that Twitter could fetch $30 billion, but TechCrunch reported that the price tag could be much lower. Twitter stock is current trading upward on the news, while Disney's downward.
Twitter's market cap was below $13 billion on Thursday, before reports of a possible acquisition by US-based cloud computing company Salesforce broke. Twitter's market cap is now almost $20 billion, making investors believe it could optimistically fetch that price.
After receiving interest in discussing a deal, Twitter has started a process to evaluate a potential sale. Salesforce.com Inc. is also considering a bid and is working with Bank of America, according to other people, who were not named in the report.
Speculation that Twitter will be sold has been rife in the recent months, given the social media company's slumping stock and difficulties in attracting new users and advertising revenue. Disney, one of the world's largest media conglomerates that also owns ABC and ESPN, could strike a new touch point for customers with Twitter in its portfolio and also own a platform where its own content could be promoted.
Incidentally, Jack Dorsey, chief executive officer of Twitter, is on the board of Disney. Twitter's stock rose as much as 21% on September 23 following reports of the talks with Salesforce. Disney's stock, however, fell, dropping as much as 2% to $91.40.
Disney chairman and chief executive officer Bob Iger has a reputation of a strategic thinker with an appetite for bold bets, such as the $7.4 billion acquisition of animation studio Pixar in 2006, just months after he became the CEO.
While Disney's balance sheet is among the strongest in the media industry, Twitter, with a market value of $16 billion, would be the company's largest acquisition since the $19 billion merger with Capital Cities/ABC Inc. in 1996.
A union with Twitter would also give Disney much larger exposure to the ad dollars that are increasingly flowing to social media sites, according Paul Sweeney, Bloomberg Intelligence analyst.
"Twitter may give them an opportunity to communicate directly with their customers in an increasingly fragmented media landscape," he said.
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