(Bloomberg) — Magic Leap Inc., the startup that raised more than $2 billion to build an augmented-reality device, is exploring options including a sale, according to people familiar with the matter.
The Plantation, Florida-based company is working with an adviser to consider strategic options that could also include forming a partnership or selling a significant stake ahead of a potential listing, said the people. Magic Leap could fetch more than $10 billion if it pursues a sale, the people said, asking not to be identified because the information is private.
Tech companies have been placing bets on the promise of augmented-reality products, which have also found uses in health care and other industries. 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’s deliberations, which may not lead to a transaction, come as the company shifts its focus to selling its products to companies in the health-care, industrial and financial sectors after slower-than-expected adoption by consumers.
Representatives for Magic Leap, Facebook and J&J declined to comment.
Led by Chief Executive Officer Rony Abovitz, Magic Leap has raised about $2.6 billion from investors and is valued at $6 billion to $8 billion, making it one of the most well-funded tech startups in the U.S. as it built a headset that could project digital objects onto the real world.
Among the company’s other big name investors are Japan’s largest wireless operator NTT Docomo Inc., Saudi Arabia’s sovereign wealth fund PIF, Singapore’s state-owned investment company Temasek Holdings Pte. and AT&T Inc.
Magic Leap lured investors with a promise to create a headset using spatial computing technologies that offer consumers high-end augmented reality experiences and tools to support remote working. Many big companies have been chasing the same technology, including Microsoft Corp. with its HoloLens device. Magic Leap, founded in 2011, unveiled a $2,300 headset in 2018 after years of secretive work and has pledged to deliver technology rivaling television or the telephone in societal impact.
These audacious promises have made Magic Leap the subject of both intense interest and a target for skeptics, who say it has failed to deliver on its early promise and hasn’t met its own sales goals. Attracting a deep-pocketed suitor could buy the company time to roll out future products while allowing investors to cash out.
–With assistance from Sarah Frier, Riley Griffin and Joshua Brustein.
To contact the reporter on this story: Ed Hammond in New York at [email protected]
To contact the editors responsible for this story: Elizabeth Fournier at [email protected], Michael Hytha
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