Exclusive: Google parent Alphabet weighs offer for HubSpot

Alphabet, the parent company of Google, is considering an acquisition of HubSpot to expand its offerings in the booming market for customer relationship management (CRM) software. This move would enable Google to tap into a wider base of enterprise customers who spend on marketing and advertising. Additionally, it would benefit Google's cloud computing business by helping it narrow the competitive gap with rivals like Microsoft and Amazon.com. The acquisition could also be positioned as a way to bolster competition in the marketing and sales software sector, challenging the dominance of companies such as Salesforce and Microsoft.

The potential acquisition of HubSpot would impact Alphabet's business strategy by providing a significant expansion into the CRM software market, enabling access to a larger enterprise customer base. It would also support Google's cloud computing business in its efforts to compete more effectively with industry giants like Microsoft and Amazon. Furthermore, the acquisition could be used to argue for increased competition in the sector to antitrust regulators, and it aligns with Alphabet CEO Sundar Pichai's goal of boosting growth, especially after lower-than-expected advertising sales in the fourth quarter.

While specific financial details of the potential deal have not been disclosed, HubSpot has a market value of $35 billion. Alphabet is considering making an offer and has been in discussions with Morgan Stanley investment bankers about the potential bid. Alphabet's cash pile reached $110.9 billion at the end of December, indicating it has the financial capacity to pursue such a large acquisition. However, no official offer has been submitted to HubSpot as of the information provided.

The market conditions for mergers and acquisitions in the technology sector are currently active, with technology accounting for the largest share of M&A during the first quarter. The sector saw a jump of more than 42% year-on-year to about $154 billion, according to Dealogic. Examples of recent deals include Synopsys agreeing to buy Ansys for about $35 billion and Hewlett Packard Enterprise acquiring Juniper Networks for $14 billion. This trend indicates a robust environment for dealmaking within the tech industry.