Google Parent Alphabet Eyes $35 Billion Acquisition Of HubSpot Amid Regulatory Scrutiny: Report

Should Alphabet proceed with a bid, it would represent a noteworthy instance of a prominent technology entity pursuing a significant acquisition despite increased regulatory oversight of the industry during the administration of U.S. President Joe Biden.

Alphabet's prospective acquisition of HubSpot would mark its largest to date, providing an opportunity to deploy a portion of its substantial cash reserves, which stood at $110.9 billion as of the end of December.

In recent days, Alphabet has met with Morgan Stanley (MS.N) to explore the possibility of an offer for HubSpot, sources familiar with the matter disclosed. Discussions have centered on determining the appropriate offer amount and assessing the potential regulatory approval from antitrust authorities.

According to sources requesting anonymity due to the sensitivity of the matter, Alphabet has not yet presented an offer to HubSpot, and there is no assurance that it will do so, reported Reuters.

Requests for comment from Alphabet, HubSpot, and Morgan Stanley were not immediately answered.

Following the news, HubSpot's shares surged by 11% to $693 during Thursday morning trading, while Alphabet's shares experienced a 1% decline, reaching $153.34.

HubSpot, which went public in 2014, offers marketing software tailored to businesses typically employing up to 2,000 individuals.

In 2023, HubSpot reported revenue of $2.2 billion but recorded a net loss of $176.3 million. Despite the loss, investors remain optimistic about the growth potential of the Cambridge, Massachusetts-based company, resulting in a 50% increase in its shares over the past 12 months.

An acquisition of HubSpot by Google would broaden its portfolio in the thriving customer relationship management (CRM) software market. This move would allow Google to access a broader range of enterprise customers who invest in marketing and advertising.

Google might also make the case to antitrust regulators that acquiring HubSpot would enhance competition in the sector by presenting a challenge to the dominance of Salesforce (CRM.N).

Currently, Google is contending with several antitrust challenges, including a significant lawsuit alleging it abused its position as the leading online search provider.

Alphabet's CEO, Sundar Pichai, is actively seeking avenues for growth, particularly after the company revealed in January that fourth-quarter advertising revenue fell short of expectations. Google's search engine and YouTube platform are facing heightened competition for advertising budgets from various other online platforms, such as Facebook (META.O), Instagram, TikTok, and Amazon.com (AMZN.O).