Who Would, or Even Could, Acquire Twitter?

Is it actually possible that Twitter Inc. (NYSE: TWTR) is in play as the next potential merger or acquisition? There has been a market rumor that the social media feed is fending off an acquisition from two unnamed companies. 24/7 Wall St. would not even pretend for one second that Twitter’s $33 billion market value might not be an issue for an acquirer. Still, when the market ponders rumors of this magnitude, it is important to get to the heart of the matter, to distinguish between fact and fiction. So, which companies would, or even could, acquire Twitter at or anywhere near the current valuation?

First on the list is Apple Inc. (NASDAQ: AAPL). This company has already made moves to break into the media scene with Apple TV, and Twitter might be a logical move in terms of diversifying into social media (again, might). The acquisition of Twitter would really just be a drop in the bucket for Apple, as it has a market cap of approximately $740 billion. Its balance sheet from December has cash and cash equivalents of $177.96 billion, including short-term and long-term investments. Apple shares were down 0.4% at $126.85 Tuesday afternoon. The stock has a consensus analyst price target of $139.59 and a 52-week trading range of $73.05 to $133.60.

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Google Inc. (NASDAQ: GOOGL) has already tried to break into social media with its Google Plus network, and it has tried to make other acquisitions and has dozens of internal side-bar efforts that are ongoing. With Twitter working as a basic RSS feed for everything social media, it at least seems logical that Google and its RSS service could expand into the social media sphere and secure more advertising — a space that Google does not want to lose any ground on. Google has a market cap of $368 billion, which would value Twitter just less than 10% of the company. Google shares were up 0.9% at $548.84, in a 52-week trading range of $487.56 to $599.65. The consensus analyst price target is $645.00.

Facebook Inc. (NASDAQ: FB) is currently king of social media. It has deep pockets and vested interest across the social media sphere, ranging from the photo sharing service of Instagram all the way to the messenger service of WhatsApp. Acquiring Twitter might make sense in terms of rounding out Facebook’s social media portfolio. However, its founder and CEO, Mark Zuckerberg, doesn’t really consider Twitter direct competition, as each company serves different social media needs. If Facebook were to acquire, that would be strong move — not necessary but still very strong. The company has a market cap of $232 billion and over $11 billion in cash and cash equivalents. Shares of Facebook were up 0.6% to $82.93. The consensus price target is $92.57, and the 52-week range is $54.66 to $86.07.

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Microsoft Corp. (NASDAQ: MSFT) could be another company that could acquire Twitter. That being said, being able to does not mean that it is likely. Microsoft easily has the cash to do so, with its market cap of $343 billion and its cash and cash equivalents of about $100 billion. If Microsoft were to acquire Twitter, it would really be a question of what CEO Satya Nadella could do with it to help the core Microsoft grow its top and bottom lines, when you consider the massive premium at which Twitter is valued. Shares of Microsoft were up 0.5%, at $41.77 in a 52-week trading range of $38.51 to $50.05. The consensus price target is $46.97.

24/7 Wall St. again wants to remind readers that Twitter rumors have been out there before, and more importantly that valuations cannot be ignored here. Twitter’s more than $33 billion market cap translates to 14 times expected 2015 revenues — and about 140 times expected 2015 earnings per share.

Apple, Google, Facebook and Microsoft all have the ability to acquire a company like Twitter if they wanted to. The question that remains is whether any of them, even the mighty Apple, could justify the price to their shareholders without losing credibility. It goes without saying that some firms would love to own and control Twitter, but who can justify paying $33 billion to do so is another matter entirely.

Maybe there is another explanation for the gain. Dan Niles of AlphaOne gave a quick CNBC interview over the phone, saying that he has now warmed up to Twitter and bought shares in the company.

Shares of Twitter were up 3.8% to $52.78, in a 52-week trading range of $29.51 to $55.99. Its consensus analyst price target is $54.14.

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