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A burst of rumors yesterday (Tuesday) had many investors considering the possibility of Google buying Twitter.
Twitter Inc. (NYSE: TWTR) stock popped 4% yesterday to close at $52.87, up $2.03 after Barron's posted an item on its website saying that the social media company had not one but two suitors.
One of those allegedly is Google Inc. (Nasdaq: GOOGL, GOOG). The other possible suitor is unknown but would have to be a tech titan with deep pockets such as Apple Inc. (Nasdaq: AAPL) or Microsoft Corp. (Nasdaq: MSFT).
Deep pockets are a prerequisite for any buyer of Twitter. With a market cap of $33.5 billion, the acquisition price would be at least $40 billion and possibly as high as $65 billion.
It would be a lot to swallow, but Google can afford to buy Twitter if it wants to.
As of the end of 2014, Google had $64.4 billion in cash and marketable securities. Since much of Google's cash is overseas and subject to taxation if brought home to the United States, any deal to buy Twitter would probably involve a mixture of cash, stock, and some borrowing.
Of course, for Twitter investors, a major acquisition would be a bonanza.
But how realistic is a deal?
The idea of Google buying Twitter has been around at least since 2009. Back then, Google and Twitter made a deal that allowed tweets to show up in Google search results.
So this marriage makes sense to a lot of people.
In fact, yesterday's rumors weren't even the first time this year that someone has suggested Google buy Twitter.
On Jan. 22, SunTrust Banks Inc. (NYSE: STI) CEO Bob Peck sent Twitter stock up more than 3% when he said just that on CNBC.
"It's not lost on Google that Twitter is the best real-time search engine out there," Peck said. "It would be a tremendous amount of leverage, obviously, having Twitter disseminated across all of Google's products."
While some critics have dismissed the possibility of Google buying Twitter, benefits for both companies could make a deal happen…
Why Google Buying Twitter Would Make Sense
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.