Twitter has been discussed as an inviting takeover target for more than five years so reports this week that Google may be looking to buy out the micro-blogging company are not exactly astonishing news.
Even so, it had the predictable effect of sending Twitter’s shares up by more than 4 percent Tuesday and raising questions of why and how Google would benefit from such a purchase.
This time around, the rumors were sparked by a report about Twitter hiring investment banking and management giant Goldman Sachs to help it fend off two possible takeover attempts. The report was by live market analysis firm Briefing.com.
Though neither company has said anything about a takeover, the report and the ensuing speculation sent Twitter’s stock up from just over $51 per share Tuesday morning to more than $53.30 Wednesday morning.
By late Wednesday afternoon, the social media company's stock had fallen back to around $52.30 in after-hours trading, though it was still higher than when the rumors first began.
Twitter, which based on Wednesday’s prices has a market capitalization of more than $34 billion, has been the subject of Google takeover rumors since at least 2009. Back then, the rumors surfaced after Google made a series of announcements that among others things involved putting Twitter data in front of its search engine users and letting users sign into its now defunct Google Friend Connect service using their Twitter IDs.
Since then, there have been multiple rumors and reports that Google was on the verge of buying the micro blogging service, but so far at least the speculation has proven groundless.
Interestingly, these latest rumors also come just a few weeks after Google said it had entered into a partnership with Twitter to include real-time tweets in Google’s search engine results. The move is part of a bid by the company to enhance its search engine results with live feeds from multiple data sources.
Engineers from the two companies are already working on integrating Twitter’s feed into Google’s search service. Google is expected to start showing live tweets in its search engine results sometime later this year.
Analysts have noted how the agreement makes sense for both companies because it gives Twitter a way to make its content available more broadly to non-registered users. For Google, it offers a way to flesh out search results with more live content.
If Google is indeed planning on purchasing Twitter, it can expect to pay immensely more than it would have had to back in 2009 when it supposedly first began eyeing the company. At that time, some analysts had pegged the value of the company at less than $1 billion. Considering Twitter’s current market cap, it’s a safe bet that Google would have to dig deep into its $60 billion cash reserves to buy out Twitter.