In an all stock transaction, software giant Microsoft (NASDAQ:MSFT) will be buying privately held GitHub, the world’s leading software development platform for $7.5 billion.
GitHub, which was valued at $2 billion its last funding round back in 2015, is a web-based hosting service for version control using Git. It is mostly used for computer code and offers all of the distributed version control and source code management functionality of Git as well as adding its own features.
Software developers use GitHub’s tools to store code, keep track of updates and discuss issues.
As part of the deal, vice president of Microsoft, Nat Friedman, will assume the role of CEO of GitHub. He is taking the place of Chris Wanstrath who founded the platform and stepped down ten months ago.
“Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovation,” remarked Microsoft CEO Satya Nadella.
“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,” Nadella added.
Chris Wanstrath has said, “The future of software development is bright, and I’m thrilled to be joining forces with Microsoft to help make it a reality. 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.”
GitHub has over 23 million individual users in over 1.5 million organizations. The platform has been on CNBC’s Disruptor List five times. According to the company which spoke to CBC last fall, GitHub is on track to book over $200 million in subscription revenue.
Microsoft (NASDAQ:MSFT) has said that GitHub’s financials willbe reported under the company’s Intelligent Cloud segment and will “accelerate enterprise use of GitHub and bring Microsoft’s developer tools and services to new audiences.”
No money is expected to be made off the deal until the year 2020 according to Microsoft, but the deal will also have little negative impact on its earnings.
“This is pretty good news for the world of open source, and we should celebrate Microsoft’s smart move,” wrote Jim Zemlin. Zemlin is the executive director at the Linux Foundation.
“Satya Nadella has righted that oversight in a spectacular way this week. Microsoft has always loved developers and wants to make a business of providing developers with great tools to help them create great technology,” he also wrote.
The deal is expected to close by the end of the year. Check out Microsoft’s (NASDAQ:MSFT) stock price.