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Discord pulls out of merger talks with Microsoft

Video gaming chat app Discord has decided to retain its independence by pulling out of merger negotiations with computing giant Microsoft Corp (NASDAQ:MSFT).

According to a Wall Street Journal report on Tuesday citing people familiar with the matter, talks between the two sides, which were initially reported last month to involve a potential US$10bn tie-up, were ended without agreement, although there was a possibility for them to resume at a later date.

READ: Discord: What is it and why is Microsoft after it?

Discord, which has around 300mln registered users, had reportedly fielded interest from three companies regarding a possible sale after the onset of the coronavirus pandemic last year doubled its monthly user base to around 140mln as people stayed at home playing games and communicating online during lockdown.

The company also managed to double its valuation in a funding round in December to around US$7bn.

Discord’s decision not to merge with Microsoft has also revived rumours of a potential initial public offering (IPO) for the group which were initially sparked in March with the hiring of former Pinterest Inc (NYSE:PINS) executive Tomasz Marcinkowski.

Meanwhile, Discord may prove to be a missed target for Microsoft’s ongoing acquisition strategy, with the corporation having snapped up several smaller tech and media firms in recent years as it looks to expand its capabilities.

Earlier this year, Microsoft spent US$7.5bn to acquire ZeniMax Media, the owner of video game studio Bethesda Softworks, following its purchase of software development platform GitHub for US$7.5bn in 2018 and a US$26.6bn merger with professional social network LinkedIn in 2016.

Shares in Microsoft were up 0.5% at US$259.42 in mid-morning trading in New York on Wednesday.

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