An acquisition could prove to be a perfect fit for both the businesses
Twitter Inc.’s (NYSE:TWTR) acquisition proved to be a disaster after potential suitors backed away. However, Bloomberg L.P., New York City Mayor’s financial terminal house, has now come under the radar with rumors that say that it may take over Twitter. Therefore, potential suitors that backed out previously, such as Walt Disney Co., Alphabet Inc.’s Google, and Salesforce.com, Inc. received increasing shareholder pressure. Consequently, the shares for all the previous potential buyers traded in red lately.
Bloomberg, being private, does not need to worry about shareholder pressure, which is why it is expected to easily pull off the acquisition. Moreover, going private would enable the micro-blogging website to fully develop its long-term growth plan and monetization strategy. The financial media business could also benefit from its data.
Twitter can aid Bloomberg in its media empire expansion. Currently, the company owns Bloomberg Radio and Bloomberg TV, which recently partnered with Twitter to include live broadcasts of recent US Presidential debates. The company’s latest Presidential debate live stream has observed a 30% rise in unique viewers over the first one. The partnership suggests that Bloomberg has already understood the power of Twitter. Moreover, instant messaging and breaking news aspects of a $12.63 billion business are quite appealing.
Bloomberg may face no difficulty to digest the acquisition due to its ample financial resources. It pulls in about $10 billion in annual revenue with hefty margins of 40%. Its market value could be observed around $80 billion using below market multiple, whilst Twitter has a capitalization of just $13 billion.
The deal could be considered unusual for the private company but it has never shown restraint when it sees good value. In 2009, it bought Business Week and later Bureau of National Affairs in 2011. The deal may seem far-fetched at first, but if looked deeply, it may prove to be perfect fit for both businesses.