Deals

Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Twitter bidders have dropped like flies and a takeover now looks unlikely, but the drawn-out sales process has whipsawed Twitter shares, sending the stock up and down about 30 percent in less than one month. 

Dying Quail
After the recent plunge, Twitter is one of the worst-performing large internet companies this year. The microblogging site has also lost about a third of its value since its 2013 stock market debut.
Source: Bloomberg

If you believe some reports, it's not entirely over yet. One suitor -- Salesforce.com -- may be crazy enough to still be intrigued by a potential deal for the beaten-down $13 billion social network, even as Salesforce's own top shareholders pray CEO Marc Benioff doesn't pull the trigger and analysts warn that it would destroy billions of dollars of value.

Benioff is already annoyed his company lost a bidding war for LinkedIn to Microsoft in June and has complained to regulators in the European Union that the deal will provide Microsoft an unfair competitive advantage. He's also been playing coy about whether Salesforce intends to buy Twitter. And as of Tuesday morning, we still don't know for sure.

But what we do know -- if this delivers any solace at all -- is that Salesforce may be able to make the math work. The $50 billion company's relatively low cash holdings (about $1 billion) means that unlike its bigger rivals Microsoft and Google, Salesforce would have to use its own stock to fund such a large deal. According to Bloomberg's merger calculator, though, even if Salesforce were to pay a 30 percent premium for Twitter entirely with stock, this may not hurt its earnings next year.

For What It's Worth
As questionable as the strategic logic of a potential Salesforce-Twitter tie-up is, a deal may still be accretive to earnings next year
Source: Bloomberg
Doesn't include any potential synergies, which are expected to be small.

That's not to say Salesforce should buy Twitter. A potential earnings boost in the near term doesn't make up for questionable strategic logic longer term. But Benioff isn't a fool and says that he'll only do a deal if management "absolutely felt like" it was the right thing for Salesforce shareholders. Let's hope so, because right now there's far more to dislike than there is to like about a Twitter purchase.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tara Lachapelle in New York at tlachapelle@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net