27 October 2016
Twitter is seen as a likely takeover target because of its shrinking stock price. Photo: Bloomberg
Twitter is seen as a likely takeover target because of its shrinking stock price. Photo: Bloomberg

News Corp denies Twitter bid

Rupert Murdoch’s News Corp. denied rumors that it was interested in buying Twitter Inc. or building a stake in the microblogging site.

Twitter’s shares rose as much as 14 percent on Wednesday after unconfirmed chatter about News Corp.’s interest in Twitter circulated during the day, Reuters said, citing a report from technology website Re/code. 

The rumors intensified after a CNBC segment, Re/code said.

The stock later pared some gains and closed up 4.1 percent at US$17.38.

Re/code said the social media site was evaluated as a takeover target because of the company’s shrinking stock price.

In the few months since co-founder Jack Dorsey returned as the chief executive, Twitter has been trying to make the site more engaging.

The company said in December it was testing a feature to show ads to people who read tweets without logging in as it tries to monetize non-active users.

“Twitter inside a larger organization definitely makes theoretical sense, whether it’s another internet company or a media company,” Monness, Crespi, Hardt & Co. Inc. analyst James Cakmak said.

A News Corp spokesman said there was no truth to the rumors.

Twitter already has several high-profile investors. Former Microsoft Corp. chief executive Steve Ballmer reported a 4 percent stake in October, making him the third-biggest shareholder after Twitter co-founder Evan Williams and Saudi billionaire Prince Alwaleed bin Talal.

Twitter has been the subject of takeover rumors in the past, including a fake report attributed to Bloomberg that claimed the company had received an offer to be acquired for US$31 billion. 

Twitter had received bids from Alphabet Inc.’s Google and Facebook Inc., according to reports.

Twitter trades at 28.12 times forward earnings, below its peer median of 36.06. Facebook has a PE of 33.08, while LinkedIn Corp.’s is 52.64, according to Thomson Reuters data.

“Even though News Corp. denied the rumors, I do think this could help investors potentially see some valuations for the stock,” Cakmak said.

Up to Tuesday’s close, the stock had fallen nearly 41 percent since Dorsey was named permanent CEO in October.

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