A rumor that Steve Ballmer wants to buy Twitter drove the stock up 9%, but an analyst says it won't happen (TWTR)
REUTERS/B Mathur
Twitter stock is up nearly 9% in midday trading on Wednesday on market chatter of a potential acquisition.
The rumored buyers: former Microsoft CEO Steve Ballmer and Saudi Arabia's Prince Al-Waleed bin Talal.
But according to SunTrust analyst Robert Peck, the chatter is just a rumor and a deal is unlikely to happen.
"We think it is extremely unlikely that Twitter would want to sell currently," Peck wrote in a note to investors on Wednesday.
Peck said that the rumor has Ballmer and the prince teaming up for a bid to buy Twitter at a price of between $22 and $26 a share. But he said that Twitter's board and CEO Jack Dorsey would not be willing to sell so early in the turnaround effort, though he said that an acquisition of the company in 2017 wouldn't surprise him.
Twitter's stock has taken a beating over the past year as the company's business and user growth have stalled. Twitter's market cap, which once stood at $25 billion, has at times dipped below $10 billion in recent months.
The decline in Twitter's stock has led to ongoing speculation that the company could be a takeover target. Ballmer and Al-Waleed already own 9% of Twitter between them.
Ballmer sees upside
S&P Global Market Intelligence analyst Scott Kessler also sounded skeptical about the rumor, suggesting that a company or an activist would be more likely to buy Twitter.
"We see value in the company's global platform, offerings and balance sheet, but think a notable activist investor or strategic acquirer would likely have to drive an acquisition of TWTR," Siegel wrote in a note to investors on Wednesday.
Still, Ballmer, who announced in October that he had bought a 4% stake in Twitter, has shown an interest in the company's potential before.
In an interview with Business Insider in February, Ballmer said that Twitter has a lot of "upside."
"They have had a bit of a tough run from a stock-price perspective, but over the longer run, I think they'll continue to be a great company," Ballmer told Business Insider.
He also noted at the time that Twitter's "cost structure probably does have opportunities to be improved, both in terms of the cost of running the services, and the number of headcount it takes to build them and market them."
Al-Waleed has a roughly 5% stake in the company. Representatives for Ballmer and the prince did not immediately return requests for comment. Twitter declined to comment.
Here's what Ballmer had to say about Twitter last year, when he started buying shares in the company in October 2015:
https://twitter.com/mims/statuses/654887753893543936
Good job @twitter,@twittermoments innovation, @jack Ceo, leaner, more focused. Glad I bought 4% past few months. Like @alwaleedbinT move too
https://twitter.com/mims/statuses/651221090912440321
I think @twitter is remarkable. There is amazing chance to innovate and grow. Excited to see progress with @jack as CEO Impressive dude!
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