MSFT – Discord Sets Aside Microsoft's Acquisition Bid In Favor Of IPO Plan Revival: WSJ

Messaging platform Discord Inc has ended acquisition talks with Microsoft Inc (NASDAQ: MSFT) as it plans to stay independent and chase a potential initial public offering, The Wall Street Journal reported on Tuesday.

What Happened: Microsoft was in advanced talks to buy the fast-growing gaming communications startup Discord, with a bid of around $10 billion. The tech giant has been on the lookout for big-ticket purchases to reach more consumers and acquired Nuance Communications Inc (NASDAQ: NUAN) for $16 billion last week.

Microsoft came near to buying Chinese video-sharing social networking site TikTok’s operations in the United States, Canada, Australia, and New Zealand last year in a deal that could have fetched $20 billion to $30 billion.

Launched in 2015, San Francisco-based Discord was in talks with at least three other companies, the WSJ report noted. The social networking startup runs a free online platform to enable conversations by means of text, audio, and video. It is primarily popular among gamers. 

Also Read: Why Is Microsoft Interested In Acquiring Discord?

Why It Matters: Microsoft’s deal with Discord would have helped it expand its social media presence beyond LinkedIn Corp and Xbox gaming business. Discord users rely on the platform to communicate with each other while playing games and find it offers better audio and features than competition including Microsoft-owned Xbox and Skype.

The startup claims to have doubled its monthly user base last year to about 140 million as daily life moved online amid the COVID-19 pandemic. The still-not-profitable company delivered $130 million in revenue in 2020, up from nearly $45 million in 2019.

Several startups with ties to the videogame industry have gone public recently, including developers Roblox Corp (NYSE: RBLX)  and Playtika Holding Corp (NASDAQ: PLTK), game-hardware maker Corsair Gaming Inc. (NASDAQ: CRSR) and game-creation tool provider Unity Software Inc (NYSE: U).

Price Action: Microsoft shares closed 0.19% lower at $258.26 on Tuesday.

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