DIS Walt Disney Co

By Dana Mattioli and Ted Greenwald 

Twitter Inc. shares plummeted on Thursday after it became apparent a sales process for the sputtering social-media company might not draw as many suitors as investors had hoped.

Twitter stock, which had been marching steadily upward since news of a possible sale surfaced in September, fell 20% to $19.87. That brought the stock within 7% of where it traded before the leak.

Alphabet Inc.'s Google doesn't plan to make a bid for Twitter, a person familiar with the matter said. That news was earlier reported by technology-news site Re/code, which also said Walt Disney Co. won't put in an offer. Along with Salesforce.com Inc., Google and Disney were seen as the most likely to put in bids for Twitter after the company effectively put itself up for sale.

Google's absence from the auction is a particular blow for Twitter. It has much deeper pockets than either of the other two possible suitors, and Alphabet sports a market value of more than $500 billion. Its dominance in search and advertising caused some analysts to speculate Google would be best suited to buy Twitter and find a way to make money off its legions of users.

Since launching its initial public offering in 2013, a series of management upheavals, product delays and muddled business strategies have complicated Twitter's effort to capture the world's mobile users and wring revenue out of them. The shares traded as high as $69 soon after the debut but have faded as growth in users and revenue slowed.

The Wall Street Journal reported Wednesday Twitter is fielding bids this week, with one expected from Salesforce, whose Chief Executive Marc Benioff sees the company as an "unpolished jewel."

But Salesforce's quest has been complicated by the reaction of its shareholders to the potential for an acquisition of Twitter. Salesforce stock dropped sharply on the Journal story in a sign investors see the deal as ill-conceived for a company that has become a Wall Street darling based on its success providing companies with customer-relationship management software.

Twitter had a nearly $15 billion market value as of Thursday's close, which would make it a big bite for Salesforce, now worth $46 billion. If Salesforce were to strike a deal for the consumer-focused company, it would be the largest acquisition in its history and take it in an entirely new direction.

In an hour-long meeting with investors at the company's Dreamforce customer conference on Wednesday, Mr. Benioff tried to quell the unease. He avoided naming the social messaging service -- referring to it as "this elephant in the room" and "that which is not named" --but also called it "great brand."

Salesforce considers a wide variety of acquisition targets, but bids on very few of them, and only in consultation with what he called a "world-class" executive team and board of directors.

And he vowed to be disciplined on price.

"The kind of things I've been reading in the emails are so extreme," he said. "I'm like `Jesus. Do they really think we'd do a deal at that level?'"

Salesforce shares rose Thursday on an easing in investor worry that a competitive auction process could drive up the price of Twitter. Salesforce jumped 4.2% to $71.26, erasing some of the prior decline.

Write to Dana Mattioli at dana.mattioli@wsj.com

(END) Dow Jones Newswires

October 06, 2016 18:50 ET (22:50 GMT)

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