On Friday the firm launched an $80m tender offer to a number of Twitter’s early employees, according to a report in the FT quoting people familiar with the deal.
The deal does not see Twitter itself raise any new cash; however, it has produced a new valuation of the microblogging firm, which was previously valued in the region of $8bn and $11bn. Its valuation was revised down last year to $8bn following Facebook’s rocky initial public offering.
The $11bn figure was one put out by Max Wolff, a senior analyst and chief economist, at Greencrest, but many take the $8bn figure as being more accurate. That means the BlackRock investment represents a significant increase in Twitter’s value and shows growth since Facebook’s IPO, which shook faith in social media businesses for some.
According to the FT, the BlackRock fund will invest up to $80m to buy stock from early Twitter employees. These staff have not had any opportunity to exercise their share options since Twitter’s $800m fundraising round in autumn 2011. If those eligible all take up the offer it will leave the fund with a stake of just under 1% in Twitter.
“The $9bn valuation agreed by Twitter and BlackRock is below that agreed in two smaller, secondary transactions completed late last year, which priced the messaging service at $10bn-$11bn. Twitter’s valuation has, however, increased since its last significant bout of fundraising in 2011. By contrast, consumer internet stocks such as Facebook, Groupon and Zynga have, in the same period fallen out of favour with investors.
“Twitter’s revenues are projected to reach $1bn by 2014. The company hopes allowing longer-serving staff to cash in their options will help it retain employees in Silicon Valley’s competitive talent market,” the FT reports.
The latest valuation follows speculation that Twitter will seek an IPO in 2014. This is based both on a report in October in the New York Times and Greencrest suggesting that Twitter’s preparations for a public debut may begin this year giving it 12 months plus to continue to build its advertising business as the economy improves before going to the markets next year.