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Will Twitter Buy Flipboard? SunTrust's Bob Peck Chimes In

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In a report published Monday, SunTrust Robinson Humphrey analyst Robert S. Peck maintained a Neutral rating on Twitter Inc (NYSE: TWTR).

Twitter is in discussions to acquire Flipboard in a deal valued at more than $1 billion. An article in Re/code quoted sources as saying that the deal would be an all-stock one.

"At >$1B, this would be Twitter's largest ever transaction (TellApart ~$550M and MoPub ~$350M) and an all-stock transaction would likely be ~4% dilutive," Peck said. This transaction would follow Twitter's recent acquisition of TellApart for ~$550M, which was about 2 percent dilutive.

In the report SunTrust noted, "Outside of the product overlap – Flipboard integrates Twitter content – perhaps the most interesting link between the two companies is on the management and investor level. Flipboard CEO and founder Mike McCue was a Twitter board member until 2012. Further, early investors in Flipboard include Jack Dorsey, Rizvi Traverse Management and Goldman Sachs."

In February, Twitter had announced its plans to syndicate Promoted tweets to the Flipboard app. In due course, this would enable advertisers to reach Flipboard users, while leveraging Twitter's targeting and analytics. "We believe these types of syndicated arrangements with current automatic MAU partners and new ones are a key part of the strategy to expand monetization," Peck wrote.

M&A activity likely remains a "focus area" for Twitter and this could include companies in domains like ad tech, video, curation, ecommerce and analytics.

"Flipboard's user friendly content aggregation across multiple platforms and content types as well as recent push for a more streamlined web-based experience and Promoted Items product could be a fit for Twitter," the report added.

Latest Ratings for TWTR

DateFirmActionFromTo
Mar 2017BarclaysInitiates Coverage OnUnderweight
Feb 2017CitigroupDowngradesNeutralSell
Feb 2017Loop CapitalDowngradesHoldSell

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