Tricia Duryee
mocoNews.net
Thursday, December 4, 2008 11:59 PM

Last month, we learned that Twitter turned down Facebook's $500 million acquisition offer, and now two reasons are surfacing as to why. The explanations came out after The New York Times covered a Tuesday night event in San Francisco, where Twitter's CEO and co-founder Evan Williams spoke publicly about the failed sale. The first reason was offered up by Williams himself, and the second came later in an analytical piece written by GigaOm. Both are valid.

Twitter's explanation: In the NYTimes article, Williams addressed Twitter's rejection of the $500 million, mostly stock offering. He said: "We explored it, as we should. We took it seriously. It definitely made sense ? the strategy we talked about with them ? but it wasn't the right time." Ultimately, he said, Twitter decided it first wanted to figure out how to make money. "Maybe we'll see each other in the marketplace."

GigaOm offered a second reason: He wrote essentially that it came down to math. Facebook wasn't offering enough. Facebook offered $500 million of its stock, or roughly 3 percent of the company, based on an inflated $15 billion valuation, which was set following Microsoft's 2007 investment of $240 million. "Since then various different reports have emerged which point to a more somber valuation of $5 billion. Three percent of $5 billion actually works out to about $150 million. Given that Twitter was valued between $80 million and $120 million in its last round, the monetary incentive just wasn't there to sell to Facebook."

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