Privately held Facebook Inc.'s
murky valuation led to the
breakdown in talks to acquire peer Twitter Inc. last fall, Peter Thiel, one of Facebook's investors, reveals in a
BusinessWeek interview.
"It became pretty clear it wasn't going to happen," Thiel says in the interview published late Sunday night, marking the first public comments from Facebook on the failed negotiations. "The deal would have to be done with Facebook stock. And then you have to figure out how much the stock is worth."
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Facebook's $500 million bid for Twitter apparently wasn't the problem. Nor was the $100 million in cash the social networking pioneer offered the popular microblogging service. The snag was that the two companies couldn't agree on a fair price for the stock portion of the bargain.
Facebook's valuation has been a matter of much debate. As The Deal reported previously, court documents recently indicated that Facebook values itself at $3.7 billion, far below the $15 billion outsiders estimated the social network's worth to be after Microsoft Corp. (NASDAQ:MSFT) picked up 1.6% of the company for $240 million in 2007.
Thiel -- whose credentials include co-founding PayPal Inc. (acquired by eBay Inc. [NASDAQ:EBAY] in 2002) and being managing partner of the Founder's Fund Management LLC venture capital firm and Clarium Capital Management LLC hedge fund -- tells BusinessWeek that Facebook is open to buying other firms but acknowledges its valuation may continue to be an obstacle.
Facebook and Twitter also reportedly continue to talk, and many observers believe they're a natural combination. Who knows, they may come to terms yet. - Mary Kathleen Flynn
