Google to Buy Hubspot in Its Largest Acquisition Deal Ever

Google's parent Alphabet Inc is reportedly in talks to acquire HubSpot, which would mark its largest acquisition to date. The acquisition is seen as a strategic move to bolster Google's competitiveness against Microsoft in the customer relationship management (CRM) sector. This move could significantly shake up the market, as Google Workspace already challenges Microsoft's Office platform, and adding HubSpot would further intensify this rivalry.

In a research note seen by Reuters, Cowen analyst Derrick Wood said, "It does appear that Google has aspirations to try to take market share from Microsoft in the productivity suite, and they can use HubSpot to bundle applications together for clients."

HubSpot, known for its marketing software catering to small and medium-sized businesses, could provide Google with additional leverage in the cloud-based applications space. The potential deal has been a topic of discussion among analysts and investment bankers, highlighting the implications it could have on the industry.

Looking at Google or its parent Alphabet's largest acquisition to date. In 2011, before Alphabet Inc was incorporated, Google acquired Motorola Mobility for a staggering $12.5 billion, this was primarily a strategic move to gain Motorola's vast trove of Patents. In 2006, Google purchased YouTube (2006) for $1.65 billion in Google stock, YouTube has grown to become one of the most visited websites globally.

Hubspot's current market cap is $30 Billion. So, if Hubspot deal got sealed it will be largest acquisition, till date, for Google as well as its parent.

It's worth noting that while talks are ongoing, no official deal has been announced yet. This acquisition could have a considerable impact on the CRM market, where Microsoft currently offers Dynamics 365 products. It will be interesting to see how this potential acquisition unfolds and what it means for the future of cloud services and CRM solutions.

Financial Terms

While discussions are ongoing, no definitive agreement has been reached yet regarding the financial terms of the potential acquisition of HubSpot by Alphabet Inc, Google's parent company.

HubSpot's shares surged by approximately 32% over the past year, elevating its market capitalization to $30 billion.

Notably, HubSpot reported a first-quarter FY24 revenue of $617.4 million, which represents a 23% increase compared to the first quarter of FY23. The subscription revenue, which makes up a large part of HubSpot's business, gained 23% to reach $603.8 million.

The company anticipates full-year 2024 revenue in the range of $2.55 billion to $2.56 billion. As of March 31, 2024, HubSpot had $447.79 million in cash and equivalents.

An acquisition of HubSpot by Alphabet would represent a significant move, potentially enhancing Alphabet's competitiveness in the customer relationship management (CRM) sector, particularly targeting smaller businesses. This strategic move could help Alphabet better compete with major CRM players like Microsoft Corp, Oracle Corp, and Salesforce Inc. However, regulatory scrutiny and integration challenges remain factors to consider in this potential deal. Stay tuned with for further updates as the situation develops.

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