What you need to know
- Startup Magic Leap is looking to partner with other companies, exploring options up to an acquisition.
- The company has been looking at interested parties like Facebook and Johnson & Johnson.
- Facebook has reportedly shown little interest due to its own Oculus business and occupation with the coronavirus pandemic.
AR startup Magic Leap is looking at a few options, including partnering with another company or selling a large stake in its business.
According to Bloomberg who broke the story this week:
Magic Leap, which counts Alphabet Inc.'s Google and Alibaba Group Holding Ltd. among its largest investors, is gauging potential interest from large tech companies including Facebook Inc. and medical giant Johnson & Johnson, the people said.An initial meeting between Facebook and Magic Leap never progressed to deal talks, according to a person familiar with the matter. The social media giant, already facing rising tariffs and coronavirus-related production pressures for its own virtual reality headsets, isn't currently interested in acquiring Magic Leap's business, the person said.
Magic Leap is estimated to fetch over $10 billion for its investors if a sale goes through, but issues have arisen in the process. Facebook has no interest in currently purchasing the company due to coronavirus supply chain-related issues and its own Oculus business which serves the same niche.
And AR, despite its cool factor, is very much a niche business at this point. Bloomberg Intelligence senior analyst, Jitendra Waral, said:
One thing to keep in mind with AR hardware is we do anticipate mainstream adoption being a few years away, so whoever buys them needs to have the financial capacity to carry the products through as AR is still evolving.
AR is a market in its infancy, and anyone who's thinking of snapping up Magic Leap should be ready to carry it to term.
