More speculation about whether Netflix (NFLX -1.2%) is the right acquisition target for Walt Disney (DIS -0.3%) -- known to be on the hunt for a more direct distribution method.
Jennifer Saba hits a couple of familiar notes (Netflix would give Disney a massive streaming audience as well as a successor to CEO Bob Iger in Reed Hastings), but points out such a deal would be expensive: Netflix trades at well over 100 times forward earnings compared with Disney's 16 times. With a standard 30% premium, a deal might come at $65B.
Returns would be inadequate financially for Disney's tastes, but Saba suggests that strategic issues may loom larger in such a takeout.
Speaking at WSJ.D Live in California, Salesforce (NYSE:CRM) CEO Marc Benioff described the recent pair of key acquisitions that got away.
Twitter: "We've never had a deal leak before... We had to stop because I'm running the business in partnership with my shareholders."
LinkedIn: "We really liked some of the business fundamentals, [as opposed to Microsoft executives which] specifically said they will create a product that will create a barrier to entry of other companies."
Disney (NYSE:DIS) decided against buying Twitter (NYSE:TWTR) partly due to concerns that the hate speech that's rampant on the social network would undermine Disney's family friendly image, Bloomberg reports.
Another reason is that although Twitter has a market cap of almost $12B, it continues to lose money, which brought out some of Disney's largest investors in opposition to a deal.
Other potential suitors to end their interest in Twitter were Salesforce and Google.
Although Salesforce was thought to be out of the mix as of this weekend, a new report has the company nonetheless still evaluating the benefits a deal could represent and what an appropriate valuation surrounding one might be.
Potentially lowball offer cited to be under deliberation.
Meanwhile, in an internal memo reportedly sent out to Twitter employees last week, CEO Jack Dorsey made no mention of any deals, instead highlighting initiatives revolving around the company's live strategy and other merits.
Twitter (NYSE:TWTR) +0.63% after hours, Salesforce (NYSE:CRM) -0.25%.
CNBC's David Faber counters claims described in a Reuters report that an October 27 (Twitter's Q3 earnings) deadline to conclude any sale negotiations between Twitter (NYSE:TWTR) and potential bidders has been set.
While Alphabet, Apple and The Walt Disney Co. are now considered to be out of the mix, other bidders are noted by Faber to remain involved (no names cited). Salesforce is still believed to be in play, while no news regarding Microsoft (reported by CNBC September 26) has developed in recent days.
Twitter shares are now down over 17% in premarket trading on the diminishing list of previously speculated big-time parties interested in the company.
Twitter shares have given up the day's gains after hours, -5.5%. Apple is up 0.3% in late trading.
A source says Twitter should have "low expectations" of an offer from Apple. And with Google reportedly not moving forward, that may leave the driver's seat open for Salesforce.com (CRM -5.8%), whose stock appears to drop the more it talks about buying Twitter. But Disney (DIS -0.2%) is still in the mix (or at least doesn't have as many sources tamping down reports of its interest).
A Reuters report earlier said that Twitter would look to end sale discussions by the time of its Q3 earnings report, Oct. 27.
Twitter has moved up 3% after hours following the news.
Gathering actual bids suggests the sale of the company is much closer than before. And while Salesforce (CRM +3%) would love to make a splash by acquiring Twitter's voluminous data, Google (GOOG +0.5%, GOOGL +0.3%) and Disney (DIS +0.1%) are expected to be part of the action too, according to WSJ's sources.
Twitter has untapped potential in advertising, e-commerce and data-rich applications, Salesforce chief Benioff figures -- though he may also be motivated by losing out to Microsoft in a race to buy LinkedIn. And at a price of $20B or more, it would be tougher to swallow for Salesforce (market cap of $49.2B) than for Alphabet ($539.9B) or Disney ($148.2B).
Adviser hiring never means anything definite, but it does suggest the search giant is taking seriously the news and speculation that Twitter could be sold to any number of other companies, including Salesforce.com, Walt Disney or even AT&T.
Twitter had hired Goldman Sachs and Allen & Co. to go over potential bids after getting interest from Salesforce. Meanwhile, Lazard served as adviser for Google as it agreed to acquire Apigee for $625M this month.
Now officially linked in to wide-ranging speculation about who might buy Twitter (TWTR -3.2%): AT&T (T -1.5%).
A purchase by AT&T could make sense, Mizuho's Neil Doshi writes, but he thinks Twitter's valuation is such that an acquisition doesn't really add up for anybody. He's downgraded TWTR to Underperform, with a price target of $15 (Twitter shares closed today at $22.96).
If not great fits, the best fits for a Twitter purchase are Salesforce (NYSE:CRM), Alphabet (GOOG, GOOGL) and AT&T, "but that is about it" and "only Alphabet makes sense from a strategic perspective."
Fundamentals at Twitter have "deteriorated significantly" over the past year, Doshi says. Verizon's paying about six times EV/EBITDA for the core of Yahoo (growing almost as fast as Twitter in many respects), while Twitter trades near a multiple of 16. Microsoft is buying LinkedIn for 20 times, though LinkedIn is growing much faster than Twitter.
Meanwhile, Nomura reiterated a Neutral rating on Twitter and price target of $13, while Loop Capital downgraded to Sell from Hold, with a price target of $18.