There at two kinds of takeover targets right now: first, those companies that would help acquirers grow once purchased and two, those that have good, profitable businesses but not good enough to please activist shareholders.
Other than that, there's not much room for deals.
The first kind of acquired growth comes from a deal like Anthem (ANTM) buying Cigna (CI). Anthem has the infrastructure in place to handle all of the additional lives that CIGNA would bring. There is a huge amount of duplication among healthcare maintenance providers that would go away pretty instantly without anyone realizing it. Plus there would be more pricing discipline as the industry has, historically, been prone to pricing battles. So this deal solves a lot of the growth that Anthem might want. It certainly beats spending a ton more money to get more customers, and it certainly trumps cutting prices to get them.
I would put the $48 billion Energy Transfer Equity (ETE) deal Williams Companies (WPZ) announced last night in the same frame as Anthem-Cigna. The deal would create a pipeline colossus that can give ETE instant growth, something needed badly in the crowded pipeline industry.
The second kind of takeover comes at the behest of an activist. Take Jana's recent position in ConAgra (CAG). There are several outcomes here. Jana could be invited into the board of ConAgra and help make it a better company. That's something that longer term could be good for the stock. The charitable trust Action Alerts Plus owns shares in Walgreens Boots Alliance (WBA), for example, because I like Jana in there pushing management. But even if Jana hadn't been successful in getting a couple of board seats, I think that Walgreens would have done well. Same with DuPont (DD), which failed to elect Nelson Peltz, or Dow (DOW), which did accede to Third Point's wishes. These kinds of spurs make sense; they make a good situation better.
Now, as good as those resolutions were for the stock, the homerun is an outright sale. I am sure that Jana, ultimately, would love to see a sale of ConAgra to a company like Kraft (KRFT) for instant big bucks. It would make sense, given the Anthem-style acquisition. But either way, Jana could win.
Which brings me to Twitter (TWTR). I think that because there is no strong leader at the company right now and the interim head is, ridiculously, trying to manage his company, Square, through the go-public process, while finding a new CEO ¿ a job for which he also wants to be a candidate -- it's subject to activism.
An activist could easily buy 5-6% of the company's shares -- heaven knows there is plenty for sale at the $35 level -- and agitate for change or a sale. However, this event would be very much at odds with the current ethos of activism. The crowd of activists right now doesn't want to launch without a safety net. Walgreens, Dupont, Dow, and ConAgra can all fare well on their own.
It wasn't like you were going to blow up your form's performance if you failed to get your people elected. The stock wouldn't fall that much. Even with DuPont, the Peltz proxy failure only took the stock down a little more than 10% from the highs, and Peltz remains very profitable on the position. That's hardly a disaster.
But Twitter? I would argue that unless an activist could get Twitter to sell itself -- something that could happen without a CEO -- the activist could be out big if there's a failure to grow the user base. Twitter, despite protestations from insiders and senior managers that revenue growth is now the key metric and it is robust, could get hammered with a terrible quarter, something that wouldn't happen with the other targets mentioned.
It's too high-risk for most activists to take a shot at. Now that doesn't mean that the logical acquirers, Google (GOOGL) or Yahoo! (YHOO), wouldn't move on Twitter. It does mean, though, that they would most likely want an invite to do so, something that activism might provide.
Right now, though, as much as it might make sense, the current crop of activists wants a win-win, and that's something Twitter can't possibly provide, at least not yet, until all of the simplifications are at last in place.