Bob Peck Discusses The Feasibility of Twitter Acquiring Yahoo

Former Yahoo! Inc. YHOO CEO Ross Levinsohn was on CNBC Tuesday where he suggested that Twitter Inc TWTR should acquire Yahoo and by acquiring Yahoo he mean acquiring Yahoo’s core business. Following this there was lots of buzz on Street on whether such a deal could take place.

Bob Peck, Managing Director and Internet Equity Analyst at SunTrust Robinson Humphrey, was on CNBC on Wednesday to discuss the feasibility of Twitter acquiring Yahoo.

“Well immediately after his comment, it was something we and our clients hadn’t heard, so we wanted to think about the hypothetical scenario,” Peck said. Then the first question we had was if it is even feasible and it’s predicated on the idea of them spinning their Asian assets, both Alibaba and Yahoo Japan. That would give you a core company with about $1.3 billion EBITDA, you put a five to seven multiple on that, you are talking of a high end of about $9 billion.”  

He continued, “To be able to pay for that maybe 30% premium, Twitter would need about $12 billion. As you know they are [fuelled] with a market-cap of around $27 billion and they may have $3 billion in cash. So, they can use some cash towards it and probably have to do some debt or some equity, but could get the deal done. So it is feasible.”

When asked on whether he is going back on his prediction of Dick Costolo being out of Twitter by the end of the year that he made a few weeks ago, Peck reiterated, “No, we stand by those comments, we think that Costolo will be gone by the end of the year.”