Facebook offered to purchase micro-blogging service TwitterNovember 25th, 2008 - 2:10 pm ICT by Amrit Rashmisrisethi
Facebook which is the number one social networking web site and the most effective growing site, offered to purchase micro-blogging service Twitter for the US$500 million in stock but the talks broke down over price, AllThingsD.com reported yesterday.
‘Several weeks of serious talks’ about a purchase of Twitter by privately held Facebook began in mid-October but broke down about three weeks ago, said the website which covers technology, media and the Internet.
Twitter also claims having six million users of its service, which allows the users to send short messages known as ‘tweets’ of 140 characters or less.
AllThingsD quoted ’sources on both sides’ as saying the US$500 million bid was an all-stock offer based on the US$15 billion valuation of Facebook from Microsoft’s purchase of a 1.6 per cent stake in the company for US$240 million in October 2007.
‘The Twitter side felt that figure was inflated and the shares should be valued at the lower figures that have also been reported for Facebook’s true valuation, more in the US$5 billion range,’ it said.
‘That would have given the deal a US$150 million price tag, which was seen as too low, especially since it was in Facebook stock and not cash,’ AllThingsD added.
It is also known that the San Francisco- based twitter even wanted to cash/Facebook stock at an even lower valuation than US$5 billion.
The investors and executives of Twitter’s were also reluctant to sell, said AllThings because they were hoping to build a revenue model for the service which is rarely popular but will develop its income stream.
‘Facebook has its own revenue-generating challenges,’ AllThingsD quoted one person close to the company as saying. ‘As much as Twitter would give them a lift in the status area, it was still a worry.’
Tags: blogging, facebook, income stream, investors, microsoft, networking web site, price tag, revenue model, san francisco, short messages, social networking, stake, stock, technology media, tweets, twitter, worry