Shares of HubSpot (NYSE:HUBS) charged sharply higher on Thursday, surging as much as 7%. As of 2:44 p.m. ET, the stock was still up 6.1%.
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The catalyst that sent the cloud-based customer relationship management (CRM) specialist higher was chatter about recent mergers and acquisitions and what it could mean for the future.
It only takes a spark
A wave of recent acquisitions in the software space has Wall Street analysts speculating about the future, and HubSpot came up in the conversation.
Earlier this week, Salesforce announced its intention to acquire Braze, a leading customer engagement platform, in a deal valued at $5.66 billion, representing a 58% premium over the prior day’s closing price. This marked the third such major acquisition of a small- to mid-cap software company in recent weeks.
Just last week, cloud software and artificial intelligence (AI) company CCC Intelligent Solutions agreed to be taken private by a group of private investment firms including GTCR and Elliot Investment Management for $6.1 billion, marking a 44% premium. On the same day, cybersecurity provider Varonis Systems agreed to be acquired by privately held competitor Proofpoint for $6.3 billion, a 52% premium to the stock price prior to the rumored sale.
In the wake of this tidal wave of merger mania, Jefferies analyst Samad Samana has surveyed the landscape and believes there are more deals to come. He posits that the Braze buyout could be the “the spark that could lead to a strategic takeout” of rivalKlaviyo. The analyst goes on to suggest that while he views an acquisition of HubSpot as unlikely, the company could be an attractive candidate for private equity.
Acquiring HubSpot would be a more costly affair, as the company has a market cap of more than $13 billion (as of this writing) — and that doesn’t include any premium shareholders would require to approve such a deal. Assuming the average premium of 51% for the above-cited deals, any acquisition of HubSpot would be in the neighborhood of $20 billion.
Like many software-as-a-service (SaaS) stocks, HubSpot has been punished in recent years as investors feared competition from AI, though the reality has proven to be more complicated. However, with the stock price near a five-year low, HubSpot could be an attractive acquisition for a company with deep pockets.
