Could Bloomberg Buy Twitter (TWTR)?
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Twitter's (NYSE: TWTR) sale process has been nothing short of a disaster with potential suitors like Google (NASDAQ: GOOGL) and Disney (NYSE: DIS) backing out and others like salesforce.com (NYSE: CRM) feeling shareholder pressure to do the same. Shares ran from $18 to just over $25 when rumors first broke only to give it all back as interest faded.
While it is looking like dire straits for Twitter and its shareholders, there is one under-the-radar media giant that could pull off a takeover of Twitter - Bloomberg LP. Bloomberg is the financial terminal powerhouse founded by former New York City Mayor Michael Bloomberg.
One reason Bloomberg could pull it off is because it doesn't have to worry about shareholder pressure. Bloomberg is a privately-held company that is largely controlled by one individual, Mr. Bloomberg. Also, being out of the stock market's eye could give Twitter the room it needs to breath and fully develop a long-term plan to grow and monetize the service.
Twitter could also help Bloomberg expand it media empire, which it has been sluggishly trying to build for years with Bloomberg TV and Bloomberg Radio. The two already have a media partnership, which was recently expanded to include live broadcasts of the 2016 U.S. Presidential and Vice Presidential debates on Twitter. Recently it was announced that Twitter's livestream of Bloomberg Politics' presidential debate broadcast on Sunday night reached 3.2 million unique viewers, an increase of 30% over the first presidential debate, which reached 2.5 million unique viewers. With the partnership, Bloomberg likely has an under-the-hood look at the power of Twitter.
Another reason Bloomberg could buy Twitter is because it has the financial wherewithal to do it. Bloomberg pulls in revenue of about $10 billion a year, largely by selling its $25,000+/year financial terminal to financial institutions around the world. In addition, margins are likely a hefty 40%. Placing a below-market multiple of 20x on earnings would yield a market value of around $80 billion for Bloomberg. Meanwhile, Twitter is modestly profitable and boasts a market cap of just $13 billion.
Yet another reason a Twitter deal could make sense for Bloomberg is because the financial media company is all about data. With 313 million monthly active users, Twitter is a treasure trove of data that Bloomberg could absorb. In addition to the data, the breaking news and instant messaging aspects of Twitter would be appealing to Bloomberg, which itself has a vast breaking news network and an instant messaging system that is a must-have on Wall Street.
While a Twitter deal would be out of character for Bloomberg, the company is not shy about takeovers when they see a good value. The company bought Business Week in 2009 and the Bureau of National Affairs in 2011, among other deals, albeit at fractions of what it would cost the company to acquire Twitter.
While a Bloomberg takeover for Twitter may seem far-fetched at first, a deeper look suggests it might be the perfect fit for both companies.
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