Alphabet Mulls Offer For Marketing Software Firm HubSpot

Google parent Alphabet is eyeing a possible acquisition, despite increased global scrutiny of tech acquisitions on antitrust grounds.

Reuters, citing people familiar with the matter, reported that Alphabet has been talking to its advisers about the possibility of making an offer for HubSpot, an online marketing software provider with a market value of $35 billion.

The report triggered a 7.45 percent rise in HubSpot’s share price to $674, up from the $635 mark before the possible acquisition was reported.

Alphabet’s share price remained mostly flat.

HubSpot plan

According to the Reuters report, if the deal does go ahead it could potentially be Alphabet’s largest ever purchase and allow it to utilise its growing cash pile, which reached $110.9 billion at the end of December.

The report stated that Alphabet has met with Morgan Stanley investment bankers in recent days about a potential offer for HubSpot, the sources said. The sources told Reuters that Alphabet has been discussing how much it should offer and whether antitrust regulators would clear such a tie-up.

The sources indicated that there is no actual acquisition offer submitted at the time writing, and there is no certainty a deal will actually emerge.

“As standard practice, HubSpot does not comment on rumours or speculation,” a HubSpot spokesperson told Reuters. “We continue to focus on building a great business and serving our customers.”

Alphabet and Morgan Stanley also did not immediately respond to requests for comment.

HubSpot provides marketing software to companies that typically have up to 2,000 employees, and has been publicly listed since 2014.

It generated $2.2 billion of revenue in 2023 but posted a net loss of $176.3 million, Reuters noted. Despite this loss, investors are excited about the Cambridge, Massachusetts-based company’s growth prospects, driving up its shares 50 percent in the 12 months.

Strategic implications

But in what way would Alphabet benefit from acquiring HubSpot?

Well according to Reuters a deal for HubSpot would expand Google’s offerings in the growing customer relationship management (CRM) software market.

The deal would also enable Alphabet to tap a wider base of enterprise customers who spend on marketing and advertising.

Likewise there could a cloud computing business benefit for Google, as it seeks to close the gap against market leaders AWS and Microsoft.

Antitrust issue?

But any move by Alphabet for HubSpot is sure to trigger regulatory eyeballing, as governments and antitrust watchdogs in major locations such as the US, UK and Europe, adopt an increasingly sceptical tone about tech acquisitions.

Reuters pointed out that Google may be able to argue that the acquisition would bolster competition in the marketing and sales software sector, and pose a genuine challenge to the domination of Salesforce and Microsoft for example.

Google however is facing a number of antitrust challenges at the moment on both sides of the Atlantic, including a landmark US lawsuit accusing it of abusing its position as online search leader.