Google parent considers acquiring marketing software firm HubSpot
What's the story
Alphabet Inc., the parent company of Google, is considering a bid to acquire online marketing software firm, HubSpot, according to Reuters.
If Alphabet proceeds with this acquisition, it would mark their largest purchase to date and provide an opportunity for the company to utilize part of its significant cash reserves that reached nearly $111 billion in December-end last year.
HubSpot has a substantial market cap of over $33 billion.
Acquisition discussions
Alphabet in talks with Morgan Stanley for HubSpot bid
Alphabet has been in discussions with Morgan Stanley's investment banking team regarding a potential bid for HubSpot.
However, no formal offer has been made by Google parent as of yet.
Following this news, HubSpot's shares surged by 11% to $693 during Thursday morning trading. On the other hand, Alphabet shares were down 1% at $153.34.
Company profile
HubSpot's market position and financial performance
HubSpot, a public company since 2014, primarily provides marketing software solutions to businesses with up to 2,000 employees.
Despite recording a net loss of $176.3 million in 2023 against revenues of $2.2 billion, the Massachusetts-based firm has seen its share price increase by 50% over the past year due to its growth potential attracting investor interest.
Market implications
Potential impact of acquisition on Google's portfolio
A merger with HubSpot could significantly enhance Google's presence in the thriving customer relationship management (CRM) software market.
This move would provide Google access to a wider range of enterprise customers who heavily invest in marketing and advertising initiatives.
Additionally, it could potentially heighten competition within the sector, challenging dominant entities like Salesforce.
Past acquisitions
Alphabet's acquisition history and shift in strategy
The acquisition of HubSpot would represent a departure from Alphabet's typical approach to acquisitions.
Their largest purchase so far was Motorola Mobility for $12.5 billion in 2011, and more recently, they acquired security intelligence platform Mandiant for $5.4 billion in 2022.
The latest move comes as Alphabet CEO Sundar Pichai seeks new growth strategies following lower-than-expected advertising sales in the fourth quarter, as disclosed by the company in January.