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Author: Alan LittleDate: 2021-02-12

Pinterest (PINS) +6% on reports of Microsoft (MSFT) deal talks

Analysts believe that Microsoft (MSFT) has the financial firepower to pull off an acquisition of social media platform Pinterest (PINS) after news of a previous approach surfaced on Thursday.

Microsoft (MSFT) shares were flat on Thursday amid speculation that the tech giant could make a move to acquire social media platform Pinterest (PINS).

A report in the Financial Times claimed that Microsoft had made a formal approach to buy Pinterest as it looks to bolster its social media presence, but it noted that talks were not currently ongoing.

Analysts believe that Microsoft does have the “financial firepower” to pull off such a large-scale merger and acquisition, pointing to its recent attempts to buy TikTok following the latter’s fallout with the Trump administration last year.

Pinterest is a prime target due its recent success, which included Q4 beats in its latest report on the back of strong ad revenue and user engagement.

The San Francisco-based company has benefited from stay-at-home COVID-19 measures, and its market value has soared 600% during the last 10 months.

Meanwhile, Bloomberg said that Microsoft’s access to $50bn in free cash flow puts it in a great position to make acquisitions.

It noted that bringing a bigger company into the fold should not be a problem and is “unlikely to move spreads wider for the tech sector’s highest rated (Aaa/AAA) credit”.

Microsoft’s market cap of around $1.8tn also means that it has few credit or equity concerns, according to Bloomberg.

Analyst Mandeep Singh said that acquiring Pinterest would boost the company’s reach in advertising and ecommerce.

News of Microsoft’s overtures sent Pinterest shares higher on Thursday.

PINS was trading 6.50% higher at $86.30 at just after midday on the New York Stock Exchange.

Microsoft was also up in pre-market, but gains in regular-hours trading eased to +0.11% with shares changing hands for $243.06.

Microsoft logo on the wall of the server room. Editorial 3D

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