Social media giant Facebook, Inc.’s (FB) acquisition of Kustomer, Inc. will undergo an E.U. antitrust investigation next month, according to Reuters. Shares closed up 5.3% at $369.79 on July 23. Facebook is scheduled to report its second-quarter earnings on July 28. (See Facebook stock charts on TipRanks)
Facebook announced the acquisition of Kustomer, a Software-as-a-Service customer relationship management provider, in November 2020 for $1 billion. The deal is aimed at enhancing FB’s WhatsApp messaging service offerings, which have grown significantly due to the COVID-19 pandemic.
According to Reuters, people familiar with the matter said that the European Commission will complete its ongoing preliminary review of the deal by August 2 and then start with a 90-day detailed investigation.
Reuters reported that Facebook has until Monday, July 26, to avoid the investigation by offering concessions. However, FB is unlikely to do so due to the “difficulty of finding the right remedies to address competition concerns.”
Facebook has previously defended the anticompetitive claim, stating that the deal was, in fact, pro-competitive and would bring more innovation to the instant messaging space.
The E.U. regulator took over the case following an Austrian request to probe the deal and made use of the power of Article 22.
Moreover, the report stated that the German antitrust agency is also looking to see if and how the deal could affect Germany based on Kustomer’s business existence there, and whether it would require FB to receive its approval too.
Facebook and other tech firms have come under constant scrutiny lately on antitrust matters by several legislatures.
Facebook commands a Strong Buy consensus rating based on 28 Buys, 4 Holds, and 1 Sell. The average Facebook price target of $396.13 implies 7.1% upside potential to current levels. Shares have gained 58.4% over the past year.
Related News:
TAL Education Crashes on New Tutoring Service Regulations
JPMorgan to Double Advisors in Broker Business – Report
WISA launches WiSA Amazon Storefront; Shares Hit Record High
