Investment-management giant BlackRock Inc. BLK +0.04% has offered to buy around $80 million of Twitter Inc. stock in a transaction that would value the short-messaging service at more than $9 billion, according to people familiar with the deal.
Some of the people said BlackRock’s offer is to purchase Twitter stock from some of the company’s early employees, and perhaps from others.
Twitter wouldn’t make any money from the transaction. If completed, the stock sale would bump up the San Francisco company’s valuation from the $8.4 billion that stemmed from 2011 stock purchases by private investors.
One the people familiar with transaction said BlackRock is offering to buy shares at about $17 each, compared with the 2011 stock sales at $16.09 each.
The Financial Times earlier reported news of BlackRock’s offer for Twitter shares.
The transaction spotlight’s Twitter’s growth and amps up pressure on the company to justify a rich valuation before it goes public in a year or so.
Twitter in the last two years has built an advertising business from essentially nonexistent to an estimated $288.3 million in 2012 advertising revenue, according to research firm eMarketer Inc.
The BlackRock investment also is likely to fuel questions about whether rich valuations for young companies can pay off with even richer IPOs, sales or stock-market appreciations down the road. The worries have been fueled by limp stock market debuts, such as those of Facebook Inc. FB +1.48% and Zynga Inc.,ZNGA +0.81% whose stock price have dropped by 17% and 75%, respectively, since their IPOs.
Since Twitter launched nearly seven years ago, the company has raised more than $1 billion from investors including Union Square Ventures, Benchmark Capital, Spark Capital and Charles River Ventures. Twitter Chief Executive Dick Costolo has said the company has plenty of money and doesn’t need to raise more by selling stock….”
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