Shares of HubSpot (NYSE: HUBS) climbed as much as 10.7% early Thursday, then settled to close up 7.4%. The stock soared after reports that Google parent Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG) is weighing the possibility of making an offer to acquire the customer relationship management (CRM) software platform provider.
Why Alphabet may (or may not) acquire Hubspot
According to sources speaking with Reuters this afternoon, Alphabet has engaged advisors at investment bank Morgan Stanley to discuss the possibility of making an offer for HubSpot. The exploration is still in its early stages.
"As standard practice, HubSpot does not comment on rumors or speculation," a company spokesperson said. "We continue to focus on building a great business and serving our customers."
What's next for HubSpot investors?
Shares of HubSpot have climbed around 20% so far in 2024, as of this writing, bolstered by its better-than-expected fourth-quarter results in February. This leaves the company with a market cap of around $33 billion today.
That would also make it the single largest acquisition in Alphabet's history -- likely more than triple the size of Google's $12.5 billion purchase of Motorola Mobility back in 2011. Any acquisition premium would likely command a significant premium over HubSpot's current share price for the company's board to seriously consider an offer.
There are no guarantees, of course, that Alphabet will make such an offer. But if it does, the internet search giant would almost certainly need to contend with heightened antitrust scrutiny from government regulators before any deal would be allowed to close.
For now, HubSpot investors would do well to continue focusing on the health of the underlying business. If a takeover offer arrives from Alphabet in the coming weeks or months, so much the better.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and HubSpot. The Motley Fool has a disclosure policy.
