SunTrust: Twitter-Yahoo Combo 'Could Make Sense'

Twitter Inc (NYSE: TWTR) shares rose Tuesday after an analyst said speculation about an acquisition of Yahoo! Inc. (NASDAQ: YHOO) is plausible.

Yahoo's former Chief Executive Ross Levinsohn earlier Tuesday told CNBC that if Yahoo divests its Asian assets, then Twitter should step in and acquire the remaining core business.

SunTrust's Robert Peck said a combination of the company's two platforms could offer strong appeal to advertisers, but Twitter would need to raise "more debt or a significant component of equity" to finance a deal.

Peck figured that absent the Asian assets, Yahoo is worth between $6 billion and $9 billion, versus its current market capitalization of about $45.8 billion.

Paying a 30 percent purchase premium, Peck said Twitter would probably need to pony up $12 billion for Yahoo.

Twitter has a market cap of about $23 billion and $3.6 billion in cash available.

But Peck, who maintains a Buy rating on Twitter, said a deal "could make sense" because of cost savings from duplicated administration as well as significant benefits from combining technology platforms and audiences.

Twitter traded recently at $37.87, up 4.1 percent.