Twitter Inc may soon be taken over by private equity group Silver Lake and well-known Silicon Valley investor Marc Andreessen. This helped shares jump as high as 10 percent on the news during Monday’s trading session.
Twitter to be Placed in Better Hands?
Looking at Twitter’s stock performance year-to-date was certainly interesting Monday. In chart form, shares were on a downward slope, but then as soon as reports hit of a potential buyout, the stock spiked nearly 10 percent.
It was a giant leap for Twitter investors, particularly for CEO Jack Dorsey.
Will Silver Lake and Marc Andreessen’s venture capital firm Andreessen Horowitz acquire a company with a market capitalization of less than $12 billion? Despite a slump in its share price, will somebody take a chance on the microblogging company?
The news was first reported on a tech news blog, The Information. The website reported that the named parties have “considered some sort of deal,” but noted that it was unclear if a deal is now “active.”
Spokespersons for both Silver Lake and Andreessen have not publicly commented on the deal.
Although Twitter Inc shares went as high as $18.65 a share Monday, they are still down by about 65 percent from last April’s peak. Twitter has been struggling with growth, particularly over the past year. Moreover, a plethora of executives have left the company in the past month alone.
Experts say that all of these pieces may signify a potential deal is a lot more likely to happen.
“Twitter has been going nowhere but down,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “It is easy prey for a takeover, and a go-private deal with Silver Lake could be its best bet. Silver Lake is smart, patient money in the IT space.”
The two names being floated around Monday certainly surprised many. For the past year, Facebook Inc , Google Inc and News Corp have been the usual names to take over the tech firm.
Andreessen being involved in the firm’s turnaround makes sense. He was an early investor in the business, and he has since been an avid tweeter as he tweets dozens of times per day.
Twitter’s Next 10 Days
As The Information‘s Jessica Lessin opines, “the next 10 days” for Twitter are essential.
It may be even more important for Dorsey, who has lost hundreds of millions of dollars in the past year alone because his two companies’ lackluster performance year-to-date. Twitter made headlines before the weekend when Wall Street slashed its market cap by $560 million, which pummeled the stock even further.
What’s next in for Twitter? Its scheduled to report its quarterly earnings next week. At the same time, it’s expected to unveil new board members.
Indeed, Twitter’s future may hang in the balance over the next week. To say the next 10 days are important is an understatement.