Reports that private equity firm Silver Lake and veteran Silicon Valley investor Marc Andreessen have considered buying Twitter – whether true or not – have sent the company’s shares soaring 6.6pc. Potentially going private could enable Twitter to escape the gilded cage of shareholder scrutiny and be the innovative fearless player we always knew it was.
Let’s face it, Twitter’s time as a public company has been far from pleasant and in terms of latitude to innovate and allow its leaders to lead, you could say Twitter has had its wings clipped.
A report in The Information that claimed Andreessen and Silver Lake were considering “some sort of deal” sent shares last night flying 6.6pc to $17.91 at the close in New York, valuing Twitter at around $12bn.
This is still down 66pc from a peak last April.
Uncaging Twitter from shareholder scrutiny
For a large portion of Twitter’s history, the social network was beak to beak with Facebook in terms of innovation and user growth but, gradually, Facebook began to soar and is now in a vastly different place. Compared with Twitter’s 332m active users, Facebook has 1.5bn users and also owns WhatsApp which just passed 1bn users, and Instagram, which has around 500m monthly users.
Since Twitter went public in October 2013, the added pressure from shareholders to perform and demonstrate user growth has been intense.
The shareholder scrutiny ultimately saw the departure of a talented and gifted CEO in Dick Costolo a year ago. Co-founder Jack Dorsey, who also leads another public company Square, returned to the CEO role in October and things have been turbulent to say the least.
Dorsey cancelled expansion plans and cut jobs but also gave away one-third of his stock worth around $200m to keep Twitter employees in the nest.
But, last week, four senior leaders flew the nest, including Twitter’s head of media Katie Jacobs Stanton, head of product Kevin Weil, the head of engineering Alex Roetter and the head of HR Brian “Skip” Schipper.
Why speculation around Silver Lake and Andreessen is exciting Twitter shareholders
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Twitter’s highs and lows have been painful to watch for its loyal and longstanding user base, which includes none other than prolific tweeter Marc Andreessen.
Andreessen and Silver Lake teamed up before on acquiring Skype, which they then sold on to Microsoft for $8.5bn in 2011.
Andreessen was also an early angel investor in the company.
A number of scenarios are being tossed about, including Andreessen and Silver Lake acquiring Twitter and taking it private or a PIPE deal where a group of investors buy a large chunk of Twitter shares.
In 2013, Silver Lake worked with Michael Dell to instigate a share $25bn buyback programme, which would bring Dell private again. Dell has since flourished and recently acquired EMC for $67bn.
Ultimately, Twitter needs to find its mojo again and compete in a world where rival social networks from Snapchat to Instagram and WhatsApp are the networks of choice for today’s teens – tomorrow’s consumers.
Going private and being nurtured by owners who care for the Twitter platform and one day returning to the public markets might be the best option for the beleaguered social network at this stage.
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