It's never pleasant for a shareholder to learn that a potential high-premium takeover of one of their investments has been scratched. Unfortunately for HubSpot (NYSE: HUBS) investors, that's exactly what happened on Wednesday. On the news, market players aggressively sold out of the shares, leaving HubSpot with a 12% decline in price on the day.
Media report says acquisition talks broke down
That morning, Bloomberg reported that Alphabet is abandoning its play at acquiring HubSpot. Citing unidentified "people familiar with the matter," the financial news agency said that the two companies "didn't reach a point of detailed discussions around due diligence."
Bloomberg reached out to Alphabet and HubSpot for comment; neither offered any.
A buyout deal would likely have commanded a high price. HubSpot provides customer relationship management (CRM) solutions, a durably hot segment in the corporate tech world.
Owning the company would have immediately and strongly positioned Alphabet as a serious competitor in the small and mid-sized business corner of the market. The company is eager to push into various segments of the ever-expanding tech sector.
It is not clear how much the deep-pocketed Alphabet would have been willing to spend to acquire HubSpot. At the end of its most recently reported quarter, the tech giant had just over $108 billion in cash and short-term investments.
Tough regulatory fight avoided?
Alphabet might also have been discouraged by a potential battle with regulators.
Lately, U.S. antitrust authorities have been rather aggressive when it comes to large-scale acquisitions and mergers. One recent example that management likely has in mind is the regulatory slog that was Microsoft's nearly two-year effort to acquire video game company Activision Blizzard.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, HubSpot, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
