HubSpot shares fall 12% after Alphabet drops takeover bid

HubSpot shareholders faced a disappointing setback Wednesday as a potential takeover at a high premium fell through, sending shares plunging 12%. The dramatic drop came after Bloomberg reported that Alphabet had decided to withdraw its bid for HubSpot. The two companies had made no progress in detailed due diligence talks, according to sources familiar with the situation.

Neither Alphabet nor HubSpot responded to Bloomberg’s comments.

The potential buyout was expected to come with a hefty price tag. HubSpot, known for its customer relationship management (CRM) solutions, operates in a highly coveted segment of the enterprise technology market. Buying HubSpot would solidify Alphabet’s position as a formidable competitor in the small- and mid-sized-business sector, an area where the tech giant is looking to expand its influence.

The exact amount Alphabet might be willing to spend on HubSpot remains unclear, although the company’s sizable cash reserves of more than $108 billion in cash and short-term investments in the last reported quarter suggested that such an acquisition was likely to be feasible.

Regulatory concerns may also have played a role in Alphabet’s decision to pull out. U.S. antitrust regulators have been particularly vigilant about large-scale mergers and acquisitions. A recent example that vividly illustrates this challenge is Microsoft’s nearly two-year pursuit of Activision Blizzard, which ran into significant regulatory hurdles.

For investors considering investing in HubSpot, it’s worth noting that the Motley Fool Stock Advisor team has identified other investment opportunities that they believe are more promising right now. While HubSpot doesn’t make their current top ten list, careful consideration of other options could yield significant gains.

The development underscores the volatility of the technology market and the unpredictability of high-stakes corporate maneuvers. For now, HubSpot continues to operate independently in the rapidly evolving CRM technology landscape.