Microsoft to acquire GitHub for $7.5 billion

Microsoft says it has reached an agreement to acquire GitHub, a global software development platform for $7.5 billion under plans to deepen its footprint in global tech ecosystem.

Under the terms of the agreement, Microsoft will acquire GitHub for $7.5 billion in Microsoft stock.

Subject to customary closing conditions and completion of regulatory review, the acquisition is expected to close by the end of the calendar year, the companies announced in a joint statement.

GitHub is a global software development platform where more than 28 million developers learn, share and collaborate to create the future.

Under the plan, the two companies will empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsoft’s developer tools and services to new audiences.

“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.”

GitHub will retain its developer-first ethos and will operate independently to provide an open platform for all developers in all industries.

Also developers will continue to be able to use the programming languages, tools and operating systems of their choice for their projects and will still be able to deploy their code to any operating system, any cloud and any device.

Nat Friedman, Microsoft Corporate Vice President and founder of Xamarin will assume the role of GitHub CEO. GitHub’s current CEO, Chris Wanstrath, will become a Microsoft technical fellow, reporting to Executive Vice President Scott Guthrie, to work on strategic software initiatives.

“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.

“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

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”, he adds.

GitHub is home for modern developers and the world’s most popular destination for open source projects and software innovation. The platform hosts a growing network of developers in nearly every country representing more than 1.5 million companies across healthcare, manufacturing, technology, financial services, retail and more.

Upon closing, Microsoft expects GitHub’s financials to be reported as part of the Intelligent Cloud segment. Microsoft expects the acquisition will be accretive to operating income in fiscal year 2020 on a non- Generally Accepted Accounting Principles (GAAP) basis, and to have minimal dilution of less than 1 percent to earnings per share in fiscal years 2019 and 2020 on a non-GAAP basis, based on the expected close time frame.

Non-GAAP excludes expected impact of purchase accounting adjustments, as well as integration and transaction-related expenses. An incremental share buyback, beyond Microsoft’s recent historical quarterly pace, is expected to offset stock consideration paid within six months after closing. Microsoft will use a portion of the remaining ~$30 billion of its current share repurchase authorization for the purchase.