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Yahoo! Inc. (YHOO) – Twitter Inc (TWTR) Deal: Is It Feasible?

Yahoo! Inc. (NASDAQ:YHOO)’s former interim CEO, Ross Levinsohn has made a suggestion on Tuesday that Twitter Inc (NYSE:TWTR) could buy Yahoo! Inc. (NASDAQ:YHOO), since the integrated company would become the strongest force in the media sector. This spark has ignited a fire among investors and SunTrust Robinson’s Bob Peck talked over phone on CNBC about this potential deal and why this deal attracts the investors’ attention.

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Peck said that as soon as he heard about this suggestion, he had a meeting with his clients to discuss about this hypothetical situation. He mentioned that the first question that popped up was, if this deal can actually happen. He mentioned that the Yahoo! Inc. (NASDAQ:YHOO) – Twitter Inc (NYSE:TWTR) deal is feasible.

“[…] Predicate on the idea of them spinning out their Asian assets, both Alibaba and Yahoo Japan. That will be […] a core company worth $1.3 billion of EBIDTA. You put a 5-7 multiple on that, you are talking about at high-end a $9 billion. If you are going to pay for that, may be a 30% premium. Twitter will need for that $12 billion. As you know their [..] market cap is around $27 billion and they have $3.5 billion of cash. So they give some cash towards it and […] could get the deal done. So it is feasible,” Peck said about the deal.

Peck had put out 10 reason why this deal can happen. They include Technology coupling, Display, Search, Mobile, Content form, Video, Audience, Targeting, Geographic and Cost Synergies. He mentioned that these reason make the deal very interesting. He talked about investors speculating Google Inc (NASDAQ:GOOGL) acquiring Twitter Inc (NYSE:TWTR) and other possibilities, but he feels that this Yahoo! Inc. (NASDAQ:YHOO) – Twitter Inc (NYSE:TWTR) deal is unheard of, and after some thinking this deal makes a lot of sense. He added that there is a logic behind this idea.

Peck said that he still stands by his comments about Dick Costolo moving out of Twitter Inc (NYSE:TWTR)’s CEO position within a year.

Disclosure: None

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