A potential Google (NASDAQ:GOOGL) acquisition of HubSpot (NYSE:HUBS) makes sense on paper, though a combination is likely to be challenged by regulators, according to Stifel analysts.
“We believe this would be heavily challenged by regulators given the DOJ already has two suits pending against the company across its Search business and its Ad Tech practices,” Stifel analysts, including Mark Kelley and Parker Lane, wrote in a note on Thursday.
The comments come after HubSpot (HUBS) shares rocketed higher by 9.3% on Thursday following a Reuters report that Google parent Alphabet (GOOGL) is in talks with advisers about a potential takeover offer. Google ticked down 0.3%.
“In our view, Google would be able to leverage its rich data assets that are aggregated across Gmail, its market-leading digital advertising products (Search, YouTube, network, etc.), and its small but growing Cloud business (Hubs might entice more GCP usage),” the Stifel analysts wrote. “We also believe this acquisition could help Google’s position in digital advertising with greater ability to leverage first-party data, all in one platform, as Google looks to purge third-party cookies on Chrome later this year.”
A deal could also help position Google better versus competition with Salesforce (Slack) and Microsoft (Teams), according to Stifel.
“GOOGL and HUBS coming together could present another alternative to the market, albeit at a level below the full-scale enterprise market that MSFT and CRM play in today,” the Stifel analysts wrote.
