Detail from Ancient Greek black-figured dinos (wine-bowl) with the first chariot in the procession

Detail from Ancient Greek black-figured dinos (wine-bowl) with the first chariot in the procession
“Sophilos Dinos” (wine-bowl) showing guests arriving at the wedding of Thetis and Peleus. In the first car -Zeus and Hera, 2nd-Poseidon and Amphitrite. Source: British Museum (Wikicommons)

Thursday, September 29, 2016

The Case for Twitter: Private Equity et. al or Apple can do

Recent reports on a Twitter (NYSE:TWTR) sale skim through the facts and misinterpret suitors . Why No one should buy Twitter (@Slate).

Twitter is a unique media property with loyal users. The user base of Twitter is organic, limited. (very different than the Facebook platform). As far as demographics go, Twitter users have more buying power than FB users have by and large.

I've done a back of the envelope LBO model where a private sponsor "PE" buyout of Twitter at a $28 Bn price today (a 21.7% premium) where Twitter though COGS and SG&A synergies. Twitter turns profitable in my Year 3 with a $32.56 MM EBITDA (Assumptions: equity contibution: 30%, blended interest cost: 30%, enterprise multiple, 7.8). More on that later1.

As a strategic tech buyer for Twitter, a see Apple doing wonderfully owning a unique news platform. Twitter’s board hired Goldman Sachs(NYSE:GS) and Allen & Co. LLP to explore strategic options. Are major suitors getting into a bidding war for TWTR ?












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