Twitter shares rallied more than three percent Thursday after rumors of a possible acquisition from Google started to circulate on Wall Street.
Speaking on CNBC‘s “Fast Money Halftime Report”, SunTrust managing director Robert Peck speculated that Google might be interested in buying Twitter.
It’s not lost on Google that Twitter is the best real-time search engine out there… there has been speculation as far back as 2009 that Google would buy Twitter from valuations of $10 billion to $20 billion pre-IPO.
Peck added that an acquisition would likely “take north of $40 billion” today.
It would be tremendous amount of leverage, obviously, having Twitter disseminated across all of Google’s products.
Google has about $45 billion in free cash. If the deal happened it would be one of the biggest in history – last year, Facebook paid $22 billion for chat service WhatsApp, and Google paid $12.5 billion for Motorola in 2012 (before selling it for significantly less two years later).
For Google, Twitter’s biggest asset is its real time search capabilities, so an acquisition makes sense on paper. Furthermore, Twitter would give Google something that it’s never been able to create itself, even with Google+ – a social network that is popular and actually matters.
The cost, however, would be prohibitive, even for Google, so unless Twitter’s value continues to fall – the stock is down significantly from its highs, but Twitter still has a market cap of almost $25 billion – I wouldn’t anticipate a merger anytime soon.