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Why Google Will Not Buy Twitter

Why Google Will Not Buy Twitter
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Earlier on Thursday, a rumor circulated Wall Street that Twitter Inc (NYSE: TWTR) was going to be acquired, this time by Alphabet Inc (NASDAQ: GOOG). It's not the first time this idea has come up.

According to Benzinga Pro, chatter surrounding Google and Twitter appeared on January 22, 2015 and July 13, 2015, not leading to anything further.

This week's rumor has instigated a price spike in the issue and it appears to be holding the gains; Twitter shares are up about 1.6 percent on the day.

Udall: Google Has Enough Problems

One major issue with any acquisition of this magnitude is regulation. 

According to Sean Udall of The Tech Strategist, Google already has enough problems with the European Union and the DOJ concerning antitrust issues. Udall added that he didn't think the company would want to bring more potential scrutiny to the inner-workings of Alphabet Inc.

The fact that both companies work together on a search engine partnership makes it easier to consider a closer relationship, he explained.

100% Premium?

Also adding skepticism to the potential deal is the 100 percent premium new rumors say Twitter will cost an acquirer. Historical standards for acquisitions of major companies since 2014 have been close to a 30 percent premium, according to Factset. 

Lower Thirst For M&A

Udall went on to point out that Google has severely reduced its thirst for Internet-related issues since it acquired Doubleclick back in 2006.

According to Udall, a more suitable acquirer would be Microsoft, IBM, Oracle or Apple. 

Twitter shares hit a high of $16.83 amid the rumor, after opening near $16.40.

Latest Ratings for GOOG

Jul 2016JP MorganMaintainsOverweight
Apr 2016Deutsche BankMaintainsBuy
Feb 2016Deutsche BankMaintainsBuy

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