William Blair ’not surprised’ by Olo takeover rumors, highlights 4 possible buyers

Investing.com -- Shares of Olo Inc (NYSE:OLO) gained 11.6% Thursday following reports from Bloomberg News Wednesday afternoon that the company is exploring a takeover after receiving interest from potential buyers.

The deliberations are said to be in the early stages, with companies like Toast (NYSE:TOST) and Oracle Corporation (NYSE:ORCL) mentioned as potential buyers.

William Blair analyst Stephen Sheldon weighed in on the rumors today, saying he “not surprised” by high takeover interest in the company given its “strong positioning with enterprise customers (ended 2024 with 86,000 locations on its platform), its expansion into emerging enterprise segment (i.e., the midmarket), and the robust capabilities it has continued to build, especially with the Engage suite and the expansion into payments.”

However, the analyst also highlighted that Olo has some “notable gaps” in its end-to-end SaaS platforms, a solution he thinks will win over time.  He said Olo would need to make its own acquisition to fill in those gaps or consider selling itself.

Looking at potential buyers for Olo, not mentioned in the Bloomberg report but highlighted by Sheldon, is PAR Technology (NYSE:PAR).  “For PAR, it now has e-commerce capabilities through MENU, but Olo is clearly the leader on this front, so that combination could significantly help the combined traction and leading market position with enterprise restaurants,” the analyst comments.

The analyst also thinks Toast could make sense. “Toast is also making a concerted effort to move upmarket (recently won Applebee’s, which is its largest location-count customer to date at close to 1,600 locations), so acquiring Olo would significantly expand its presence on the front and give it a great base on which to expand,” he said.

Sheldon added that Shift4 Payments (NYSE: FOUR) could also be a potential buyer, as well as Oracle, which owns MICROS and was mentioned in the Bloomberg article.

“Overall, while a transaction is far from certain, we could see the potential strategic rationale for a variety of different players to pursue acquiring Olo,” the analyst added.

The analyst has a neutral-leaning Market Perform rating on the stock but said it could trade at a slightly higher multiple in the event of a takeover.