Salesforce Walks Away From Twitter Bid

- October 16th, 2016

Salesforce is the latest company to walk away from bidding for social media company Twitter. Salesforce CEO Marc Benioff says it is not the right fit.

Google (NASDAQ:GOOGL), Walt Disney (NYSE:DIS) and now Salesforce (NYSE:CRM) have all reportedly walked away from bidding for social media company Twitter (NYSE:TWTR).
Twitter shares have plummeted to their lowest price since the summer.  As of October 14, shares fell as much as 8 percent and ended the day down about 5 percent. Year-to-date, Twitter’s share price has dropped 27 percent. On the other hand, Salesforce’s share price shot up to a high of $76 compared to its $70.98 price at open.
It seems the shareholders have spoken: there was little confidence in the deal before and Salesforce CEO Marc Benioff has listened to his investors. In an interview with the Financial Times, Benioff says “It’s not the right fit for us for many different reasons. You’re going to look at price, you’re going to look at culture, you’re going to look at everything.”

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James Cakmak, analyst at Monness Crespi Hardt & Co, is unsurprised; he says Twitter needs to clarify the company’s mission statement and communicate its direction. There are now calls for Twitter’s CEO Jack Dorsey to step down amid Twitter’s lack of sale and new strategy. Cakmak says that “maybe a change in the leadership is something that would be welcome”. Twitter is currently stuck between being too big to be taken private but also needing a big company to take it over.

Who is left at the table?

A source privy to Twitter’s senior management team has indicated the sale process is close to dead. But many are turning towards to Europe for the next potential buyer.
Speculation surrounding SoftBank (TYO:9984) is generating interest and marginally improving Twitter’s fortunes. They could collaborate with other investors and there is talk they are partnering with Saudi Arabia to create a huge tech fund. There is value in Twitter’s free marketing platform opportunity and the site is massive in Japan, where SoftBank is headquartered.
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Securities Disclosure: I, Emma Harwood, hold no direct investment in any company mentioned in this article.

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