With the TWTR market capitalization clocking in above $33 billion, the acquisition would make a serious dent in Google’s cash hoard, which sat at $64.4 billion at the end of 2014.
Speculation that the interest from GOOG and another unnamed company prompted TWTR to hire Goldman Sachs Group Inc (NYSE:GS) in an effort to fend off takeover attempts also contributed to the stock’s rapid rise Tuesday.
A move by Google to gobble up Twitter, which is unprofitable, and whose stock is sitting just 6% off 52-week highs, would make little sense from at least one standpoint: GOOG just recruited a new CFO, Ruth Porat, from Morgan Stanley (NYSE:MS) in an effort to control costs and, in the words of Bloomberg, help the search giant find some “fiscal discipline.”
Even though a GOOG buyout of TWTR seems unlikely, Wall Street seemed to buy the rumor, as Twitter shares rose on more than double their average daily volume. More than 36 million shares changed hands Tuesday; average daily volume stands at less than 17 million.
Twitter options also saw heavy action in response to the rumors.
As of this writing, John Divine was long GOOG stock and GOOGL stock. You can follow him on Twitter at @divinebizkid or email him at email@example.com.
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