We don't know what's in the "use of proceeds" section of Twitter Inc.'s stealth initial public offering registration statement, or even the exact size of the cash pile that the social media company hopes to amass.
The timing of the filing may be motivated by the JOBS Act, or the Jumpstart Our Business Startups Act, as the company prepares to pass the $1 billion revenue threshold. Another motivation could be to fund a new phase in the development of its business model, including acquisitions.
"I would say that fairly soon after the IPO is bedded down, as long as it has gone well, Jack Dorsey and his team will be going shopping," said Mark Little of Ovum plc describing his expectations for the Twitter co-founder.
"They've got to a stage in their evolution where they have a fairly good business model in terms of advertising," Little said. "They'll have an idea of taking that further, perhaps into ecommerce."
In addition to organic investment in Twitter's business, the analyst suggested, the social media company will also look for targets.
"They may have their eye on Pinterest," Little said.
Image-sharing website Pinterest raised a $200 million round of financing in February from new investor Valiant Capital Management LP and previous backers Andreessen Horowitz, Bessemer Venture Partners and FirstMark Capital. The deal brought the company's funding to $338 million, and put its valuation at $2.5 billion or so.
Online commerce research group Add Shoppers LLC reported that in August, Pinterest accounted for nearly 23.2% of retail sales generated by social media sites in terms of revenue, edging out Twitter, with its slightly more than 23%.
In terms of overall traffic, Twitter had more than 260 million U.S. visits, an increase of 8% from the prior year, making it the 20th most popular site, according to Experian Marketing Services. Pinterest.com was number 32 in the U.S., with more than 152.8 million visits reflecting an 18% gain.
"[Twitter has] a close relationship with Pinterest," the Ovum analyst said, drawing a parallel to Microsoft Corp.'s €5.44 billion ($7.16 billion) deal to buy the mobile phone business of Nokia Corp. The software company and Finnish mobile device maker had been partners since 2011 on mobile product development.
"As we have seen with other companies, like MicroSoft and Nokia, these close relationships often turn into some more permanent organization," Little said.
French mergers and acquisitions lawyer Laurent Faugerolas joined Dechert LLP. For other updates launch today's Movers & shakers slideshow.
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