Seeking AlphaSeeking Alpha

Talkspace surges 36% after report of Amwell takeover talks (update)

Update 10:30am: Updates shares, adds analyst comment.

Talkspace (NASDAQ:TALK) jumped 36% after a report that Amwell (NYSE:AMWL) is in discussions to acquire the company for a $1.50/share. Amwellfell 7.1%.

Amwell (AMWL) is in talks to pay $1.50/share for Talkspace (NASDAQ:TALK), according a Calcalist report over the weekend. The deal is expected to be in Amwell shares. A $1.50 price tag would represent a 150% premium to Talkspace's Friday closing price of 60 cents.

A possible deal comes after Seeking Alpha in June reported that Talkspace (TALK) received but declined a buyout approach from Amwell (AMWL). Talkspace rejected Amwell's expression of interest before any numbers were discussed, according to a person familiar with the company's operations at the time.

Talkspace (TALK) also shot down a similar approach from privately held Mindpath at about $2.50 to $3 share, according to the June report.

A potential acquisition of Talkspace also come after a report in late September that a largest investor was pushing for the company to appoint a permanent CEO and take steps to help stabilize the company's faltering share price.

Cowen analyst Charles Rhyee downplayed a possible Talkspace (TALK) purchase, writing that channel checks indicate there is no sales process occurring. He added that he doesn't believe an acquisition fits into Amwell's (AMWL) Converge strategy.

"We believe TALK's B2B business could be relatively more attractive asset for AMWL as the company should be able to generate some revenue synergies from the combination given their payor relationships across the two companies, Truist analyst Jailendra Singh wrote in a note. Singh has a hold rating a $5 price target on Amwell (AMWL).

Talkspace (TALK), which has counted Olympic swimming gold medalist Michael Phelps and singer Demi Lovato as celebrity endorsers, went public through a high-profile SPAC deal last year, but has struggled since then. The company's co-founder and CEO Oren Frank also stepped down in November.