HubSpot offers cloud-based software for automation, online marketing and sales
According to Reuters Alphabet is consulting with investment bankers Morgan Stanley on a potential acquisition of HubSpot. The company, which offers online marketing software, currently has a market value of $35 billion. In 2023, HubSpot had $2.2 billion in revenue, and its shares almost doubled.
If Alphabet does submit an application, it would be a rare example of a tech giant making a mega-deal amidst tightened regulatory policies in the sector. Google is already at the center of several antitrust cases, including a lawsuit filed by the Department of Justice that accuses the company of abuse of a dominant position in online search and a lawsuit over its digital advertising tools.
HubSpot shares rose 9% after the news was published on Thursday, while Alphabet’s — fell 0.5%.
«Regulatory hurdles may prevent approval, but $111 billion in cash reserves and strong free cash flow provide Alphabet with sufficient capacity for large-scale M&A», — wrote Bloomberg Intelligence analyst Robert Schiffman.
The acquisition could also become the largest in Alphabet’s history. The previous big deal was made in 2011 — the acquisition of Motorola Mobility for $12.5 billion (which was later resold to Lenovo for just $2.9 billion).
Earlier, regulators prevented Adobe from to buy Figma for $20 billion due to competition concerns, so it’s interesting to see how Alphabet’s attempts will be met. HubSpot faces quite a bit of competition from Adobe and Salesforce, so the acquisition is unlikely to provide Google with a monopoly, although it will put some pressure on the companies.
«HubSpot currently focuses more on small and medium-sized businesses, but Google’s support could change that, challenging Salesforce’s roughly 40% market share in cloud-based sales and customer service automation,» wrote Anurag Rana of Bloomberg Intelligence.