Facebook Mulls Options After Twitter Talks Fail - InformationWeek

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3/2/2009
02:56 PM
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Facebook Mulls Options After Twitter Talks Fail

Social networking site on the hunt for alternatives to Twitter buyout.

Facebook executive Peter Thiel said the company is still considering acquisitions after talks with Twitter stalled.

In the first public confirmation that the two companies discussed a merger last fall, Thiel told BusinessWeek in an exclusive interview this week that Facebook and Twitter couldn't agree on price and structure but Facebook still intends to grow.

One stumbling block, according to Thiel, was that the companies couldn't agree how much Facebook stock would be worth. He acknowledged that the social networking site could encounter the same problem in other acquisition talks.

Facebook planned to use its stock to fund most of the purchase, according to the report.

Microsoft estimated Facebook's value at $15 billion about two years ago when it purchased preferred stock for the privately owned company, but Facebook said its shares of common stock would be worth around $2.7 billion.

Citing unnamed sources, BusinessWeek said that Facebook recently told Twitter representatives that its stock was valued at $8 billion to $9 billion, but employees were selling stock on the secondary market with valuations of $2 billion to $4 billion. Twitter insisted that Facebook valued its stock based on open market shares and Facebook retreated, according to the report.

Thiel's comments about plans for the acquisition and the disagreement over the price marked the first confirmation that the social networking site intended to buy micro-blogging site Twitter. The Wall Street Journal's tech blog, All Things Digital, reported on the talks in November, saying that Facebook wanted to buy Twitter for $500 million.

Thiel toldBusinessWeek that talks with Twitter continue, despite the disagreement. Officials for Facebook and Twitter have declined to comment on a possible deal between the two companies.

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