Shares of Twitter took a dive Friday following announcement by Salesforce that it would not place a bid for the company, effectively putting paid to attempts by the social networking site to find a buyer for now.
Twitter shares slumped by around 5 percent following the announcement that the only remaining major contender for its acquisition has ruled out making an offer. They were down to $16.88 in afternoon trading on Friday, as reported by the New York Times.
“In this case, we’ve walked away,” Salesforce Chief Executive Marc Benioff told the Financial Times. “It wasn’t the right fit for us.”
The remarks by the cloud computing company’s boss effectively put paid to Twitter’s ambition of closing a deal for its takeover by the end of October.
Salesforce was considered the leading serious contender to buy the social media company last week, following withdrawals of other major potential bidders. Other suitors, such as Google and Walt Disney, had indicated that they would not make an offer.
Benioff, who has not concealed his interest in Twitter, finally bowed to pressure from investors not to proceed with an acquisition deal, especially considering the withdrawals of other potential bidders.
Salesforce shareholders had questioned the justification for the company to buy an Internet company that was in need of serious fixing. Investors which sent in messages to the company’s executives expressing their disapproval of a deal they considered rather steep included leading mutual fund Fidelity Investments.
At an analyst meeting last week, Benioff attempted to allay investors’ fears saying he has always been quite careful when making any deal.
It would have been catastrophic for Salesforce had it decided to go ahead with making a bid for Twitter, considering how greatly it relies on its shareholders to get things done. The business software company depends on stock to pay its employees and make deals. Its shares would have suffered badly if Benioff had proceeded with the acquisition, hurting its ability to get deals done and pay employees.
The Salesforce CEO explained his interest in acquiring Twitter during a customer conference this month. He said he saw it as a great medium for companies to receive and address complaints from their customers while also promoting their services. Interest in learning more about the tech market was also partly responsible.
Salesforce shares were up by more than 5 percent to $74.27 at the end of trading in New York on Friday.
With the only serious potential bidder left out of the race, sources told the Financial Times that a Twitter sale is practically off, although its advisers are still looking for more potential bidders.
Salesforce withdrawal should now allow Jack Dorsey devote more attention to ways to improve Twitter’s fortunes. The social network’s co-founder and chief executive was initially opposed to a sale, but has become more open to such an outcome in recent weeks.
Twitter has been finding competition quite tough against both old and relatively new rivals. Some of its users are leaving and it is finding hard to convince more people to join its platform. This has hurt its ability to compete for advertising dollars.