Insiders say Google was interested in buying Snap for at least $30 billion last year

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Evan Spiegel - Sun Valley

Reuters

Snap CEO Evan Spiegel.

We keep hearing that Google floated an offer of at least $30 billion to buy Snap in early 2016.

Three people, ranging from people inside and close to the company, separately confirmed they had heard the chatter and price tag, with one calling it an "open secret" among Snap's upper ranks and certain tech industry circles.

Business Insider first heard the rumor of Google's $30+ billion interest in Snap last year, and heard further tales of the discussions from more insiders over the past several days.

It's unclear how formal the discussions these insiders say happened may have been, but Snap and Google have been close for a long time. Informal discussions between companies are held frequently in the tech world, especially surrounding major upcoming events, like a public offering or a large round of fundraising.

The initial $30+ billion offer would have been discussed just before Snap went on to raise its Series F round of private funding in May 2016, valuing the company at $20 billion. CapitalG, the growth equity fund managed by Google parent Alphabet, ended up quietly participating in the round.

One person claimed Google and Snap also had discussions about a potential buyout just ahead of Snap's initial public offering earlier this year, and that an offer in the ballpark of $30 billion has continued to be on the table since the IPO.

Chatter that Snap passed up a chance to sell to Google for at least twice its current value could be especially painful for investors and employees grappling with the company's sinking stock. Snap shares are currently trading at around $12.50 a share with a market cap of roughly $14 billion.

That's well below the $24 billion valuation at which Snap priced its IPO in March.

When asked for comment, a Snap spokesperson told Business Insider that, as far as formal discussions go, "these rumors are false." Google declined to comment.

As Snap's stock sinks lower and lower, one possible motivation behind the rumors could be that people are hoping Snap will get acquired. But the rumors have persisted for a long time, and they're being talked about as fact both inside and outside the company by lots of people in a position to know.

Why a deal between Snap and Google would make sense

eric schmidt

REUTERS/Rebecca Naden

Alphabet Executive Chairman Eric Schmidt.

The two companies are already close. Sources say there is mutual respect between each side's leadership, and Alphabet executive chairman Eric Schmidt is an early advisor to Snap CEO Evan Spiegel. Snap is one of the largest customers of Google Cloud and uses Google's suite of apps internally.

Google has always wanted to own a hot social network and has tried several times with products like Google+ and Google Wave. In 2013, it was rumored that Google tried to grab Snapchat for $4 billion after Spiegel turned down an offer from Mark Zuckerberg.

Joining forces with Google could also help Snap monetize its platform better (Google is raking in the vast majority of all digital ad money) and it could be a good way for Spiegel to stick it to Zuckerberg, whom he has a rocky relationship with.

And here's why a deal potentially wouldn't work

27-year-old Spiegel is the ultimate decider of whether the company would sell or not, and people close to the company say that he's fiercely independent and has shown no serious interest in getting acquired. Spiegel is widely considered to be a visionary, contrarian CEO who values running his company in southern California and outside of the Silicon Valley bubble, where Alphabet is headquartered.

It's also unclear how Spiegel and his roughly 2,500 employees would be integrated organizationally into Google or Alphabet. Spiegel doesn't strike us as the kind of executive who would like reporting to a boss.

Do you know more about Snap and Google's relationship? This author can be contacted securely and discreetly via email or Confide at aheath@businessinsider.com. Twitter direct messages work too.

Get the latest Google stock price here.

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