Facebook Thrown Out of Tree After Caught Kissing With Twitter

-Twitter Logo-At Web 2.0 Summit a couple weeks ago, John Battelle asked Mark Zuckerberg about a potential acquisition of Twitter. Zuckerberg essentially avoided the question and Caroline McCarthy, suggested such a notion was ludicrous. This morning, Kara Swisher revealed that acquisitions discussions were actually taking place but eventually ended in failure.

The reason, according to Kara, was that Facebook offered a $500 million stock exchange at Microsoft’s $15 billion valuation. Twitter executives and investors suggested that such a valuation was not accurate in the current market environment. Public rumors suggesting a current stock valuation of $4 – $5 billion have supported Twitter’s position.

Twitter continues to grow at an extremely fast rate: 600 percent over the past year. Unfortunately nobody has figured out an effective way to monetize the site. This morning though, Mike Arrington posted about a new service which inserts ads into Twitter. Based on my follower level, I could be earning $237.52 a month. That would definitely help cover part of my rent but probably not worth it given that I’d lose a number of followers for using the service.

An acquisition of Twitter still makes sense for Facebook though given that Twitter is essentially an abstracted version of the Facebook status with the ability to create two-way conversations. Even though the deal has fallen through this time around, Facebook would benefit greatly from buying the company which owns the defacto micro-blogging platform.

Do you think a merger makes sense? How much would you want for Twitter if you owned it?