Citi Has Four Reasons Why It Hopes Disney Doesn't Buy Twitter

PUNE, India - Sept. 30, 2016 - PRLog -- Not so fast.

While some investors may be cheering the potential of a Walt Disney Co. bid for Twitter Inc., the analysts at Citigroup Inc. don't seem to be fans. "Any way we slice the data, we just can't get enthusiastic about this potential transaction," the team, led by Jason Bazinet write. "As such, we're maintaining our 'buy' rating on Disney. But, that means we hope the press reports are wrong and Twitter is acquired by some other firm."

Earlier reports from Bloomberg say that Disney is one of a few recent firms showing interest in a potential bid for the troubled social media firm. Speculation gained steam last week when it was reported that Salesforce.com Inc. was interested. With Disney, the owner of ABC and ESPN, the benefits would likely come from having a new online outlet for entertainment, sports, and news. Jack Dorsey, chief executive officer of Twitter, is also on the board of Disney.
While shares of Twitter rose on the news, Disney saw its stock decline.

Citi lists four reasons they believe buying Twitter is not in Disney's best interest.

Here's a quick summary:

1. Trouble with internet M&A
Previous mergers and acquisitions in the internet space examined by Citi yielded few media marriages that turned out well. "In the last 15 years, we cannot think of a single web-based property that was successfully acquired by a traditional media firm." Specific instances listed include AOL Inc. and Time Warner Inc., as well as MySpace Inc. and News Corp.

2. Twitter has its challenges
This has been a story for quite some time and is the reason shares of Twitter have been declining for a number of months. Unfortunately, Citi doesn't see these trends turning more positive anytime soon. From troubling user growth to management turnover, Twitter is under increasing scrutiny.

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