F5 acquires NGINX for $670M to move into open-source, multi-cloud services

Multi-cloud architecture is a huge trend in enterprise, and today F5 made a big move to bring its own business closer to it. The company, which provides cloud and security application services, announced that it has acquired NGINX, the commercial company behind the popular open-source web server, for $670 million.

We’d actually been hearing murmurs of this acquisition for a while, with a price tag of around $700 million. On top of that, our sources say NGINX was shopping itself around, and other companies that had been looking at it included Citrix. That deal fell apart on price.

NGINX had last raised money nine months ago, a $43 million round led by Goldman Sachs to fuel expansion, and had positioned itself as a strong alternative to F5 in recent years. (It had not disclosed its valuation in that round.) F5 itself, by coincidence, was said to have retained Goldman Sachs in 2016 to field acquisition interest in itself, although that never led to anything.

“F5’s acquisition of NGINX strengthens our growth trajectory by accelerating our software and multi-cloud transformation,” said François Locoh-Donou, president and CEO of F5, in a statement. “By bringing F5’s world-class application security and rich application services portfolio for improving performance, availability, and management together with NGINX’s leading software application delivery and API management solutions, unparalleled credibility and brand recognition in the DevOps community, and massive open source user base, we bridge the divide between NetOps and DevOps with consistent application services across an enterprise’s multi-cloud environment.”

Indeed, our sources noted that growth had stalled somewhat at the company, which was one reason for its interest in NGINX. F5 had a market cap of $9.6 billion at the close of markets today. In its last quarterly earnings, the company said its revenues had grown just four percent compared to the year before. NGINX meanwhile has been a juggernaut in providing open-source tools for maintaining and running websites since first emerging in 2004 as an alternative to Apache. The company currently runs 375 million websites with some 1,500 paying customers taking additional services, like support, load balancing, and API gateway and analytics.

F5 said that it will be merging its own operations with those of NGINX, with current NGINX CEO Gus Robertson and founders Igor Syosev and Maxim Konovalov all joining the company.

“NGINX and F5 share the same mission and vision. We both believe applications are at the heart of driving digital transformation. And we both believe that an end-to-end application infrastructure—one that spans from code to customer—is needed to deliver apps across a multi-cloud environment,” said Robertson, in a statement. “I’m excited to continue this journey by adding the power of NGINX’s open source innovation to F5’s ADC leadership and enterprise reach. F5 gains depth with solutions designed for DevOps, while NGINX gains breadth with access to tens of thousands of customers and partners.”