Twitter reject Facebook

Nov 25, 2008 Posted by Rizki Akmanda on Nov 25, 2008 in Technology and Internet | 0 comments

Twitter reject Facebook

Facebook offered to buy Twitter for $ 500 million of Facebook overvalued stock, Kara Swisher says. Twitter rejected the offer for several reasons:
• At Facebook’s real valuation, $ 5 billion or so, the offer amounted to only $ 150 million (not bad for two-year old company with no revenue, but a far cry from the billion-dollar dream)
• Twitter has high hopes for its own secret revenue model which will be announced next year.
• Twitter’s investors are not stupid: They wanted cash. Facebook presumably does not have that much cash to spare.

The $ 500 million was offered in an all-stock form, said sources on both sides, at the $ 15 billion valuation that came from the Microsoft investment in the company last October.
The Twitter side felt that figure was inflata and the shares should be value at the lower figures that have also been reported for Facebook’s true valuation, more in the $ 5 billion range.
That would have given the deal to $ 150 million price tag, which was seen as too low, especially since it was not in Facebook stock and cash.
In fact, Twitter wanted cash, which was not possible for Facebook, or Facebook stock at an even lower valuation that $ 5 billion.
But, said several sources close to Twitter, the primary reason for selling was not simply because its board did not want to yet or perhaps ever.
Said one source: "The question is, is it really a good idea to sell on the first chance you get ?"…
“It’s more about timing,” said one person familiar with Twitter’s motivations. “There is a strong feeling that there is still an opportunity-even with the economic downturn-to blow this thing out.”