Microsoft to buy GitHub for $7.5 billion

Isaac Cain
June 4, 2018

Microsoft Corp. said it reached an agreement to buy GitHub Inc., the code repository company popular with many software developers, for $7.5 billion in stock.

In the wake of the deal, one thing is very clear: It makes ideal sense for Microsoft to buy the startup. While Microsoft hasn't specified it, reports say the company will pay $7.5 billion for the acquisition. The shares were up 0.6 percent to $101.38 at 9:55 NY.

As part of the deal, Microsoft vice president Nat Friedman will be appointed CEO of GitHub, while current GitHub CEO and founder Chris Wanstrath will become a Microsoft technical fellow, the company said.

Microsoft has been extremely skeptical of open-source in the past, as it directly threatens their proprietary technology, but it seems the company is now making the shift to try and keep up with everyone else. As with all acquisitions, this one between Microsoft and GitHub is subject to regulatory approval and "customary closing conditions", but assuming that all goes smoothly, Microsoft expects the deal to close by the end of the calendar year.

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GitHub may soon fall under the wide umbrella of Microsoft. The platform hosts a growing network of developers in almost every country representing more than 1.5 million companies across healthcare, manufacturing, technology, financial services, retail and more. Only time will tell how Microsoft will fully leverage GitHub's development community - will it strongarm GitHub users onto Microsoft's cloud and other software services, or perhaps sideline GitHub's Atom editor in favor of Visual Studio's code editor? This deal will mark another dramatic step in that direction.

But Chief Executive Officer Satya Nadella downplayed those concerns by saying on a conference call that GitHub will continue to be an open platform that works with all public clouds.

San Francisco-based GitHub is an essential tool for coders. Many corporations, including Microsoft and Google, use it to store their corporate code and to collaborate. GitHub also offers private and enterprise-focused code repositories, which it charges for. It also didn't have a particularly healthy 2016, losing $66 million over three quarters. "The future of software development is bright, and I'm thrilled to be joining forces with Microsoft to help make it a reality", Wanstrath said. Despite the centrality of GitHub for the developer community, the company has lately run into some financial and leadership issues. According to Business Insider, the two technology companies came together to discuss a joint market venture and a potential acquisition too.

In 2015, GitHub was valued at $2 billion.

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