J.P. Morgan Fund in Talks to Take Twitter Stake

FEBRUARY 27, 2011 THE WALL STREET JOURNAL

By ANUPREETA DAS And AMIR EFRATI
A fund run by J.P. Morgan Chase & Co. is in talks with Twitter Inc. to take a minority stake in the rapidly growing microblogging company, people familiar with the matter said.
The investment, which is expected to value Twitter at more than $4 billion, will be made from the bank's new $1.2 billion digital growth fund, these people said. Exact terms of the potential deal couldn't be learned.
Earlier

J.P. Morgan Plans New-Media Fund
Discussions between J.P. Morgan and Twitter are continuing, and there is no guarantee a deal will be struck, the people added.

J.P. Morgan also has purchased a significant amount of Twitter's shares on exchanges for private-company stock, separate from its talks for a direct stake in the company, said a person familiar with the matter.
A Twitter spokesman said the company doesn't comment on interest by other companies. A J.P. Morgan spokesman declined to comment.

J.P. Morgan said in a regulatory filing last week that it had raised $1.2 billion for the new fund, much more than the initial target of between $500 million and $750 million reported by The Wall Street Journal.
The fund, being run out of J.P. Morgan's asset-management unit, will target private Internet and digital-media companies that have an up-and-running business model, steady revenue and cash flow.

Besides the potential deal with Twitter, which was reported earlier by the Financial Times, the J.P. Morgan fund could also be interested in online gaming firm Zynga Inc., which is in discussions to raise nearly $500 million from institutional investors, one of the people familiar with the matter said.

Twitter's revenue and valuation have risen as the company continues to work on ways to translate its more than 200 million registered users into a profitable business. Research firm eMarketer said it expected the San Francisco-based company to generate $150 million in revenue this year, largely from offering marketers the chance to advertise on the site.
Twitter, which was created in 2006 and now has about 350 employees, introduced advertising into its service last year.

Twitter's value has more than quadrupled over the past year or so to nearly $4 billion, based on the last round of financing raised by the company, which was disclosed in December. In low-level, informal talks with potential suitors in recent months, the company has said it is worth an additional several billion dollars, people familiar with the matter have said. Both social-networking company Facebook Inc. and Internet-search behemoth Google Inc. have at times expressed some interest in potentially acquiring Twitter, people familiar with the matter have said.

Two people familiar with the matter recently said Twitter isn't considering any buyout offers, and has told possible suitors it is focused on building an independent company.