Datadog rumoured to be sniffing round GitLab as tech M&A market heats up

Code management and workflow vendor GitLab is contemplating a sale according to reports, with Datadog pitched as a likely buyer.

The code management platform has “attracted interest from peers" according to Reuters, and is working with bankers to explore its options.

Datadog, a fellow DevOps darling, has been identified as a potential bidder. GitLab’s share price currently gives it a valuation of around $8bn. Observability and monitoring specialist Datadog is currently valued at around $44bn.

New York-based Datadog has absorbed a rake of companies, both before and after its 2022 IPO, most recently ActionDesk in 2023. GitLab IPOd in 2021, and has not been quite as acquisitive as DataDog.

Reuters also noted that GitLab and cofounder Sid Sijbrandij is set to undergo treatment for cancer for the second time, but would continue with his duties. Sijbrandij controls 45.51% of the firm’s voting shares.

The putative deal is part of a wave of M&A activity rippling through the tech market, Reuters said, most notably reported negotiations for Google parent Alphabet to acquire cybersecurity firm Wiz for $23bn.

Reuters put this rash of M&A activity down to AI and cloud computing advances pushing companies to expand their offerings.

An alternative explanation is that companies like GitLab – and its backers - surfed the cloud computing and DevOps wave of the 2010s, when interest rates were virtually zero and coders were king.

But there is a new next big thing in the shape of AI, which incidentally dramatically has the potential to dramatically change how companies develop software.

So, now it’s time for backers and founders to cash in their chips if they’ve done well. Those that have done less well will be calling time on their investments to recoup as much as they can.

And all but the most unlucky will be moving along to a new, glitzier casino. Whatever that happens to be. Plus ca change.