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2013 Deals of the Year: Twitter IPO Wins Plenty of Followers

Despite questions about its business model, the social media phenomenon raises $2.1 billion on the New York Stock Exchange.

“Phew!” Using just seven of the 140 characters allotted by Twitter, that’s how Goldman Sachs Group banker Anthony Noto tweeted his take on the social media company’s much-anticipated initial public offering on the New York Stock Exchange. Noto, Goldman Sachs’ New York–based co-head of global telecommunications, media and technology, led the underwriting. He and his firm beat out the sector’s traditional top dog, Morgan Stanley, and its co-head of tech banking, Michael Grimes, for the lead-left position, the highest-listed name on the offering.

Launched in 2006, San Francisco–based Twitter now has some 230 million monthly users who post a total of about 500 million tweets a day. The website has transformed the news cycle, as evidenced by its breaking reports of US Airways Flight 1549’s landing in the Hudson River just off Manhattan in 2009. It helps move markets too: Last August tech giant Apple’s value rose more than $20 billion after investor Carl Icahn tweeted that he’d been talking to CEO Tim Cook about a stock buyback.

2013 Deals of the Year
JPMorgan Chase & Co.
BTG Pactual
Credit Suisse Group
Moelis & Co.
Goldman Sachs Group
  Goldman Sachs Group

Whether Twitter can produce actual profits is a nagging question, though. With more than three quarters of its users outside the U.S. and on mobile devices, the company doesn’t lack for eyeballs. But returns remain elusive: Twitter reported a net loss of $133.9 million for the nine months ended September 30. That didn’t stop the offering from raising $2.1 billion, making it the second-largest U.S. Internet IPO after social media rival Facebook’s $16 billion flotation in 2012. Twitter stock closed at $52.34 on December 11, double its offer price of $26 on November 7, giving the company a market cap of more than $29 billion.

Securing the top underwriting position was a touchdown for ex–U.S. Army Ranger Noto, 45, and his firm, which he rejoined in 2010 after serving as CFO of the National Football League. Morgan Stanley also participated in the deal, with five other banks, including Deutsche Bank and JPMorgan Chase & Co. But its lead role on Facebook’s less-than-stellar offering may have opened the door for Goldman, which earned an estimated $26.5 million of $68 million in total fees after the underwriters sold their 10.5 million shares.

Noto’s bank was tight-lipped, but its statement did exceed 140 characters. “Twitter’s focus was — and remains — to maximize value for shareholders and to build a sustainable and lasting company,” said a Goldman spokesman. “They know how to deliver on those goals, and we are proud to work with them.”

Bucking the Trend
With these extraordinary closed and pending deals,
our ten rainmakers earned their keep in choppy markets.
($ Millions) *
1U.K. bank Barclays follows a £5.8 billion ($9.1 billion) rights issue with a $2 billion hybrid bond offering.$1832
2Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital pay $27.4 billion to take ketchup maker H.J. Heinz Co. private.$97–107
3U.S. telecom Verizon Communications agrees to give Vodafone $130 billion for the British carrier’s 45 percent stake in Verizon Wireless.$93–103
4Founder Michael Dell and Silver Lake Partners privatize U.S. computer maker Dell for $24.9 billion.1$82–92
5Brazilian phone company Oi and Portugal Telecom agree to a $15.7 billion tie-up under the former’s name.$70–90
6Cable giant Liberty Global buys the U.K.’s Virgin Media for $25.5 billion.$882
7Advertising firms Omnicom Group and Publicis Groupe agree to a $35 billion Franco-American merger of equals.$50–70
8Social media company Twitter launches a $2.1 billion initial public offering on the New York Stock Exchange.$682
9China’s Shuanghui International Holdings closes a $7 billion buyout of U.S. pork producer Smithfield Foods.$51–61
10iPhone maker Apple issues $17 billion worth of bonds.$532
* Estimates unless otherwise noted. M&A totals only include advisory fees;
debt and equity totals only include underwriting fees.

1 Deal value provided by Dell.

2 Publicly disclosed.
Source: Thomson Reuters/Freeman Consulting Services.

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