Following news that media giant Disney is weighing up a bid to acquire struggling social media company Twitter, analysts at Citigroup Inc. have poured scorn on the idea of this pairing, insisting: “Any way we slice the data, we just can’t get enthusiastic about this potential transaction”.
As Bloomberg reports, the Jason Bazinet-led Citi team wrote that history did not suggest a happy match for Twitter and Disney, pointing out: “In the last 15 years, we cannot think of a single web-based property that was successfully acquired by a traditional media firm.” Time Warner Inc.’s purchase of AOL Inc. and News Corporation’s acquisition of MySpace Inc. were cited here.
Furthermore, the analysts predicted that, if the deal went ahead, Disney shares would fall by $5 even in the best case scenario, and expressed their belief that Twitter’s catalog of problems, which include stagnant user growth and rapid management turnover, could be too much for Disney to significantly relieve.
The analysts wrote that, while they continued to rate Disney stock a ‘buy’, “that means we hope the press reports are wrong and Twitter is acquired by some other firm.” Disney stock was hit by the news of the firm’s interest in Twitter, suggesting that the markets would not look upon the deal well.
