Wednesday, March 24, 2021

Microsoft Reportedly In Talks To Acquire Discord

Rumors are surrounding Discord right now about Microsoft buying the gaming application company. I call the news a rumor as the New York Times basically stated they only had one anonymous source. I'll trust the VentureBeat story as more credible as they claim two sources. So while the New York Times is claiming Microsoft is looking at purchasing Discord, VentureBeat reports that Discord's leadership is looking at multiple offers.

Of course, Discord may not sell to anyone, opting for an IPO. The recent IPO of Roblox probably opened some eyes.

Roblox had a suggested price point of $45 a share that was set by the New York Stock Exchange, where Roblox trades under the ticker RBLX.

On its first day of trading Wednesday, Roblox stock shot up 54.4%, closing at 69.50. The stock climbed another 6.3% on Thursday, closing at 73.90 on the stock market today. That thrust its market value to near $39.5 billion.

With a direct listing, no new shares in the company are created and sold. Nor will the Roblox IPO raise any capital. Instead, current investors can begin selling already existing shares based on demand when trading opens.

After two weeks of public trading, Roblox stock ended the day at $64.50.

The VentureBeat story also threw cold water on the idea any deal may occur.

One source I spoke with said that Discord has engaged Qatalyst Partners to evaluate possible suitors. Qatalyst, which Silicon Valley dealmaker Frank Quatrone (executive chairman) founded and CEO George Boutros runs, handled the process when Discord was up for sale in 2018. Back then, the company decided not to take anyone up on offers. Qatalyst declined to comment.

The talks in 2018 were constant, with possible acquisition prices ranging from $2 billion to $6 billion. But quite often the buyers wanted Discord to do something it didn’t want to do, like embrace advertising. Discord also felt like its values were best protected at that time by staying independent. This means that it is possible that the current sales process may not result in Discord actually being sold.

“It’s hard to tell the difference between a serious acquisition attempt and a fishing expedition,” said one source, who asked not to be identified. “It can fall apart at any time. The reality is the company is doing really well. I don’t see a reason they would want to sell. They seem to be completely in control of their destiny right now.”

Is Microsoft really about to purchase Discord? Anything's possible. But before panicking and rushing out to get a replacement communications application for your guild/corp/free company, I'd pay attention to the financial press. After all, the way business works, we'll have a few months to find a replacement after the sale is finalized.

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