For deal makers, the departure of a chief executive always raises an interesting question: Is that company for sale? Merger advisers are almost certainly asking that now after Dick Costolo’s announced plans to resign from Twitter on July 1. And several elements of the company’s corporate governance make it easier to sell than some of its peers.
The company has been the subject of takeover rumors for much of the last year, and its shares surged as recently as last month on speculation that a technology giant was interested in exploring a takeover bid. (People close to Twitter said that nothing of the sort was happening.)
A longtime Twitter investor, Chris Sacca, has mused over the last two weeks that Google might make a logical buyer.
Twitter executives and their advisers took pains on Thursday to say that Mr. Costolo’s departure was not tied to any external event and instead came after he first told the board of his desire to move on late last year.
In a call with analysts, Mr. Costolo acknowledged that the board understood its fiduciary duty to look out for investors but added emphatically that the company’s preference was to remain on its own.
“We’re absolutely committed to maximizing value for shareholders,” he said in response to a question from an analyst. “We see no reason we can’t do that as an independent company.”
Should some technology behemoth be interested in making a takeover bid, Twitter would be a significant target, but not a prohibitively expensive one. The company’s market value as of Thursday’s market close, before Mr. Costolo’s impending departure was announced, was about $23.5 billion.
And unlike many Internet titans today, Twitter has only one tier of stock, rather than multiple classes, some of which hold much more voting power than others. The founders of Facebook and Google, for example, maintain control over their empires through special classes of shares that make unwanted takeover bids virtually impossible.
Twitter has no such defense. So despite the board’s intentions to remain independent, if a suitor emerges with an offer that sways enough shareholders, the company may have no choice but to give in and sell.
Source: Free News Headlines Technology Costolo Exit at Twitter Kick-Starts Deal Speculation