Twitter shares are jumping in pre-market trading on speculation that Marc Andreessen could partner with private equity group Silver Lake to buy the company.
The speculation comes from Jessica Lessin of The Information. Here’s what she reported Sunday evening:
Marc Andreessen and private equity firm Silver Lake have considered some sort of deal, according to several people. The two teamed up on Skype back in the day, and Andreessen’s love for Twitter is, um, obvious. He was also an angel investor in the company.
I don’t know if anything is active, and a spokespeople for Andreessen Horowitz and Silver Lake declined to comment. One idea being floated around in general is a PIPE deal where private investors buy a piece of a public equity via newly issued shares. These deals are generally done when companies are desperate for cash, and public investors won’t give it to them, which doesn’t seem to be Twitter’s issue.
Twitter shares are down 76% from their peak, trading at $16.80, giving the company a market cap of $11.5 billion. As a result, it makes sense that some folks are starting to sniff around Twitter as a takeout target.
This doesn’t sound like anything is imminent. Still, Twitter shares were up as much as 8% early Monday morning on the news.
Why would someone buy Twitter?
- It still has 300+ million monthly users.
- It’s on pace to do ~$3 billion in revenue this year, which would be up 50% compared to the year prior.
- Twitter still owns “real-time” in a way that Facebook doesn’t. There’s value in that.
And, as Lessin points out, Twitter could stand to trim some fat and become a profitable, growing technology company.