Bob Peck Discusses The Feasibility of Twitter Acquiring Yahoo

Former Yahoo! Inc. (NASDAQ: YHOO) CEO Ross Levinsohn was on CNBC Tuesday where he suggested that Twitter Inc (NYSE: TWTR) should acquire Yahoo and by acquiring Yahoo he meant acquiring Yahoo’s core business. Following this, there was a lot of buzz on the Street on whether such a deal could take place.

Bob Peck, Managing Director and Internet Equity Analyst at SunTrust Robinson Humphrey, was on CNBC on Wednesday to discuss the feasibility of Twitter acquiring Yahoo.

"Well immediately after his comment, it was something we and our clients hadn't really heard, so we wanted to think about the hypothetical scenario,” Peck said. "Then the first question we had was if it is even feasible and it's predicated on the idea of them spinning their Asian assets, both Alibaba and Yahoo Japan. That would give you a core company with about $1.3 billion EBITDA, you put a five to seven multiple on that, you are talking on the high end of about $9 billion.”

Related Link: SunTrust: Twitter-Yahoo Combo 'Could Make Sense'

He continued, "To be able to pay for that maybe 30 percent premium, Twitter would need about $12 billion. As you know they are [fueled] with a market cap of around $27 billion and they may have $3 billion in cash. So, they can use some cash towards it and probably have to do some debt or some equity, but could get the deal done. So it is feasible."

When asked on whether he is going back on his prediction of Dick Costolo being out of Twitter by the end of the year that he made a few weeks ago, Peck reiterated, "No, we stand by those comments, we think it's possible he will be gone by the end of the year."