F5 Acquires NGINX For About $670 Million: The Details You Need To Know

By Dan Anderson ● March 14, 2019

F5 Networks, a Seattle-based leader in multi-cloud application services, announced it was acquiring NGINX — which is an open source leader in application delivery. As a combined company, F5 and NGINX will enable multi-cloud application services across all environments and provide the ease-of-use and flexibility developers require while also delivering the scale, security, reliability, and readiness network operations teams demand. As part of the deal, F5 will acquire all issued and outstanding shares of privately held NGINX for a total enterprise value of approximately $670 million subject to certain adjustments.

Going forward, F5 will remain committed to continued innovation and increasing investment in the NGINX open source project to empower NGINX’s widespread user communities. and F5 is going to continue maintaining the brand with current NGINX CEO Gus Robertson and founders Igor Sysoev and Maxim Konovalov.

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“F5’s acquisition of NGINX strengthens our growth trajectory by accelerating our software and multi-cloud transformation,” said F5 president and CEO François Locoh-Donou. “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.”

Locoh-Donou also said that every organization can benefit from the flexibility enabled by modern technologies without compromising on security and reliability. And the combined company will enable every customer from app developers to network engineers with tools they need to ensure their apps are available and secure across every platform.

F5 is going to enhance NGINX’s current offerings with its own security solutions and integrate F5 cloud-native innovations with NGINX’s software load balancing technology — which will accelerate F5’s time to market of application services for modern and containerized applications. Plus F5 is going to leverage its global sales force, channel infrastructure, and partner ecosystem to scale NGINX selling opportunities to the enterprise. The acquisition of NGINX is expected to increase F5’s software revenue growth and increase the company’s software revenue mix in 2019.

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“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,” added Robertson. “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.”

After the closing of the acquisition, F5 will maintain the NGINX brand. And F5 will maintain NGINX’s operations in San Francisco, California and other locations around the world. F5 is likely going to fund the transaction through cash on the balance sheet. And the company is going to suspend its common stock share repurchase program. However, the company will continue to evaluate market conditions and other factors including F5’s capital requirements in determining when and whether to continue the program. The acquisition has been approved by the board of directors at both companies.

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Foros was the financial advisor and Wilson Sonsini Goodrich & Rosati provided legal counsel to F5. And Qatalyst Partners served as financial advisor to NGINX.