Twitter rejects $500m Facebook offer
LONDON - Talks have broken down in Facebook's bid to acquire Twitter in exchange for $500m (£330m) worth of stock after the two companies failed to agree on the stock's value.
Facebook expressed interest in acquiring micro blogging site Twitter for a number of weeks, holding private meetings with the popular microblogging start-up in October, but negotiations finally broke down at the beginning of November.
The main stumbling block was the disagreement over the price of Facebook's stock.
Facebook was offering 3.33% of its stock valuing Twitter at $500m (£330m). This based the stock valuation on the price Microsoft paid when it purchased a 1.6% stake in the social networking site for $240m (£160m) in October 2007.
That price, when Facebook was in full stride in a stabilised economic climate, valued the company at $15bn (£10bn).
Twitter investors and management saw that figure as inflated and valued the shares at a lower level, putting Facebook's value in the $5bn (£3bn) range.
This is in keeping with the way net stocks have plummeted in recent months, with Google dropping 61%.
That would have seen the deal give Twitter a value of $150m (£100m), which was seen as too low.
Biz Stone, co-founder of Twitter said that the company wanted to remain independent to expand on its messaging service and try their hands at building a functioning revenue model.
Twitter, with over 6m registered users compared to Facebook's 120m, has yet to develop a way to generate significant revenues, which is seen as one of its main stumbling blocks for growth.
However, the company is one of the fastest growing Web 2.0 platforms, with registration numbers growing 600% over the past 12 months.
Latest jobs Jobs web feed
- Senior Mobile Manager Ultimate Asset £35000 - £50000 per annum + excellent benefits, City of London
- International Marketing Manager Ball & Hoolahan £50,000 + Car/Car Allowance, London
- Senior Data Planner - Superb Agency - Soho - up to £50k Fill Recruitment Ltd to £50k + great benefits, Soho, London
- Account Manager - top agency in Leeds Perfect Marketing People To £32K, Leeds
- Online Marketing Executive - global business services giant Perfect Marketing People To £25k, Manchester
- Digital Marketing Manager Salt £40000 - £50000 per annum + bonus, London