Reports indicate that Alphabet, the parent company of Google, is contemplating an acquisition offer for HubSpot, a $35 billion online marketing software company. It would be Alphabet’s largest acquisition if the deal goes through.
Reuters reports that Alphabet has consulted with Morgan Stanley advisors about the potential move. The parties discussed what a fair offer for HubSpot would be. Second, investment bankers and Google discussed the possibility that antitrust regulators would reject the merger.
At its current price point, HubSpot is worth $35 billion. There was an 11% increase to $693 in share price as news of a potential acquisition spread. Nevertheless, by the close of trading, the stock price had fallen marginally to $660.
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In 2014, the firm, based in Cambridge, Massachusetts, went public. On average, it serves businesses with 2,000 employees or more. With $2.2 billion in sales, HubSpot lost $176.3 million in 2023. Shares have increased 50% in the past year despite this setback, as investors are enthusiastic about the company’s potential for growth.
There is no assurance that Alphabet will table an offer, and it has not done so yet. Antitrust authorities might pose the greatest challenge to the acquisition. The DOJ has filed two lawsuits against Google, alleging that the tech company formed monopolies in the online advertising and search engine industries.
Apple and Alphabet are facing investigations in the EU for allegedly restricting communication and directing. The European Union holds that tech giants Apple and Alphabet restrict anti-steering marketing by making it difficult for companies to contact users directly and offer them better deals outside their app stores.
In a separate probe, the European Union is looking into whether or not Google favoured its products and services in search results. Because of this, it may have an unfair advantage.
About HubSpot
HubSpot’s marketing software company, which went public in 2014, focuses on serving businesses with 2,000 or fewer employees. The corporation made $2.2 billion in sales in 2023 despite losing $176.3 million. Shares of HubSpot have increased in value by 50% in the last year, indicating that investors are still bullish on the company’s growth prospects. The investment community remains enthusiastic about the Cambridge, Massachusetts-based firm.
With a stronger foothold in the rapidly growing CRM software industry and the possibility of acquiring HubSpot, Google could reach a broader range of enterprise clients willing to spend money on marketing and advertising. In addition to bolstering Google’s cloud computing business, this move would help the company compete with Amazon and Microsoft.
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Furthermore, Google may contend with antitrust authorities that the purchase would encourage competition in the sales and marketing software industry, posing a threat to the hegemony of Salesforce and Microsoft. This is particularly relevant given that numerous of these competitors are incorporating AI into their products, an area in which Google is also making substantial investments.
Advertising budgets are becoming increasingly competitive for the company due to platforms such as Amazon, Facebook, Instagram, and TikTok. Recent acquisitions like Synopsys’ $35 billion purchase of Ansys and Hewlett-Packard Enterprise’s $14 billion purchase of Juniper Networks demonstrate an overall trend of increased dealmaking within the technology sector, which this prospective deal reflects. According to Dealogic, technology mergers and acquisitions had a stellar first quarter, increasing by more than 42% year-on-year to almost $154 billion.