On Monday, Microsoft (NASDAQ: MSFT) announced its plans to buy GitHub, a software development platform, for $7.5 billion in stock. Presuming regulatory approval for the acquisition, Microsoft anticipates closing the sale by year end. The acquisition will allow the companies to combine resources, giving developers more opportunities to succeed at each stage of the development lifecycle and allowing GitHub users to scale at enterprise levels. In addition, Microsoft will get access to new users with whom it can share its developer tools.
‘Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovation,’ said Satya Nadella, CEO of Microsoft, in a news release. ‘We recognize the community responsibility we take on with this agreement and will do our best work to empower every developer to build, innovate and solve the world’s most pressing challenges.’
Founded in 2008 by Chris Wanstrath, PJ Hyett, Tom Preston-Werner and Scott Chacon, GitHub has 800 employees worldwide, about 65 percent of whom are remote. The others are located in the company’s San Francisco headquarters and in company offices in Amsterdam, Tokyo and Boulder. GitHub has more than 28 million registered users and over 85 million repositories on the platform. In August 2017, the company had $200 million in annual recurring revenue (ARR).
According to the announcement, GitHub will operate independently to give developers an open platform, so they can continue to work with their preferred programming languages, tools and operating systems. Microsoft corporate vice president Nat Friedman will serve as GitHub’s new CEO. Wanstrath will join Microsoft as a technical fellow, reporting to executive vice president Scott Guthrie. Once the acquisition is complete, GitHub’s financials will be included in the Intelligent Cloud segment.
‘I’m extremely proud of what GitHub and our community have accomplished over the past decade, and I can’t wait to see what lies ahead. 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 in Monday’s announcement. ‘Their focus on developers lines up perfectly with our own, and their scale, tools and global cloud will play a huge role in making GitHub even more valuable for developers everywhere.’
According to CNBC, GitHub was also talking to Google about a possible deal, but Wanstrath selected Microsoft because of his relationship with Nadella. News of the acquisition did not have a dramatic impact on Microsoft’s stock price. On June 4, when the announcement was made, Microsoft stock was valued at $101.67 per share. As of 7:45 p.m. EDT yesterday, Microsoft stock was valued at $102.49 per share.
Microsoft said it best in the news release: ‘Today, every company is becoming a software company and developers are at the center of digital transformation; they drive business processes and functions across organizations from customer service and HR to marketing and IT. And the choices these developers make will increasingly determine value creation and growth across every industry.’
Over the last decade, GitHub has created a loyal following and has become the place for developers to build their applications. With solid ARR and 28 million registered users, GitHub was a natural acquisition for Microsoft.