Merchant Innovation

Google To Buy Twitter?

The rumors have resurfaced again – Google is looking to buy Twitter – and investors have taken notice with shares in the social media site jumping by almost 5 percent and adding a billion and a half to the company’s overall value.

According to reports in The Guardian, it looks like this version of the potential Google-Twitter pair-up is a little more serious than previous iterations of this idea; Twitter has reportedly been contacted by two companies (Google and one other) with a serious interest in purchasing the whole deal.

If it happens, it would be a very expensive pick-up for Google. Twitter’s market cap exceeds $34 billion and it carries around a consumer base of 280 million active monthly users. Though Google tried to dive into the social media world with Google+ and even managed to capture about 300 million active monthly users, the service never really captured the minds and interests of the user base, who remain on the whole much more enthusiastically into Facebook or Twitter.

And Google, being Google-sized, does not actually have to beat Twitter if buying them stands a pretty good change of jumpstarting Google’s social network ambitions.

And, with a $60 billion+ pile of cash, Google can afford to buy Twitter, even at a premium.

And a premium price it will almost certainly be – particularly with Google’s apparent power to sky the value of any potential acquisition partner’s share. Current estimates place the Twitter price Google is likely facing at around $50 billion (to scale, that is 1,000 times more than it paid for Softcard). Not only would that swallow a lot of Google’s free cash, it would also leave them with a fairly impressive tax liability as it would be forced to repatriate all those dollars from overseas before they could spend them.

Neither Twitter nor Google returned requests for comment.

It is worth mentioning that this is not this particular rumor’s first rodeo. The “Google to buy Twitter” story has been around for years, and some reports indicate that executive teams from both firms even met on a merger in 2011.

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