Chat startup Discord Inc. has halted talks to sell itself to potential suitors, including Microsoft Corp.
MSFT -0.27%
, according to people familiar with the issue, as it resumes interest in a possible IPO in the course of the line.
Microsoft was in advanced talks to acquire Discord for at least $ 10 billion, The Wall Street Journal reported last month. Those talks ended without a deal, although it’s possible they could be rekindled in the future, some of the people said.
Microsoft, whose market value was close to $ 2 trillion on Tuesday, is on the hunt for acquisitions that would help it reach more consumers. Last summer, it examined a bid to buy parts of the TikTok video-sharing app amid a high-profile geopolitical deadlock initiated by the Trump administration.
Discord had at least three companies interested in a deal, some people said. They said Discord is doing well and would rather remain independent at this point.
San Francisco-based Discord operates a free online text, audio, and video chat platform that is particularly popular with gamers. Its popularity has skyrocketed since the pandemic broke, and people used it as a safe way to connect with friends and family.
Launched in 2015, Discord doubled its valuation to $ 7 billion in a round of funding in December. According to data from Crunchbase, the company has raised about $ 480 million in total. Investors include Greenoaks Capital, Greylock Partners and Index Ventures.
Last month, in a move that could facilitate an IPO, Discord hired its first finance director, Tomasz Marcinkowski, a former Pinterest. Inc.
executive. While Discord is not a video game company, many of its users rely on it to communicate with each other while playing games, and several companies associated with the video game industry have gone public in the past year, including developers Roblox Corp. and Playtika Holding Corp.
, game hardware maker Corsair Gaming Inc.
and game creation utilities provider Unity Software Inc.
Roblox took a direct listing last month, scrapping its original plans to go the traditional IPO route, after the video game company decided it was too difficult to set the right price for its stock.
A deal for Discord would have helped Microsoft expand its social media presence beyond LinkedIn Corp. and what it developed through its Xbox video game business. Discord users say the platform offers more compelling features such as higher quality audio than competing chat services, including even those from Xbox and Skype, which Microsoft also owns.
In addition to last year’s botched TikTok calls, Microsoft gave up on Mixer, the video game live streaming service that struggled to compete with the likes of Amazon.com Inc.’s
Twitch alphabet Inc.’s
YouTube and Facebook Gaming.
The technology giant has made several acquisitions in recent years, most recently the proposed deal for Nuance Communications Inc.
Earlier this year, it spent $ 7.5 billion on the purchase of video game company ZeniMax Media Inc., $ 7.5 billion in software development platform GitHub Inc. in 2018 and $ 26.6 billion on LinkedIn in 2016.
Write to Sarah E. Needleman at [email protected] and Cara Lombardo at [email protected]
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