Microsoft buys popular coding hangout GitHub in US$7.5 billion deal

Microsoft buys popular coding hangout GitHub in US$7.5 billion deal

Microsoft buys popular coding hangout GitHub in US$7.5 billion deal

GitHub is an open source coding site which allows software developers to host their code in the cloud or to collaborate inhouse on projects.

The deal is a big bet on Azure, the company's fast-growing cloud business, as it will be able to lure more code developers who use GitHub and drive more business to Microsoft.

The two have confirmed that Github will operate independently of Microsoft, as an open platform using all programming languages, tools and operating systems for any project.

GitHub now hits 27 million software developers and 80 million repositories of code, according to Bloomberg. GitHub provides a platform for developers to host and review code and manage projects from open source to enterprise software.

Just six months ago, Github was reported to be in the process of exploring a potential IPO, though it has yet to turn a profit to date, with the company's last valuation coming in at $2bn (£1.5bn) in 2015.

"Most importantly, we recognize the responsibility we take on with this agreement", said Microsoft CEO Satya Nadella, according to The Verge. It also benefits from a powerful network effect-as more developers have joined it, GitHub has become even more attractive to other coders.

Meanwhile, Github has been struggling for 9 months to find a replacement for Chris Wanstrath, who announced he was stepping down as CEO a year ago. Microsoft will use a portion of the remaining ~$30 billion of its current share repurchase authorization for the purchase.

Over the past few years, GitHub and Microsoft were having conversations to pursue acquisition but nothing materialized. The future that Microsoft sees is where they can "empower" developers right from ideation to collaboration to deployment of their code on any cloud and any device. "When you write the largest check the firm's ever written on a Series A deal, there will always be questions on whether this is a good deal", partner Peter Levine told Fortune Monday morning. Bloomberg also reports that GitHub has been bleeding money in recent years, citing three quarters of 2016, so maybe it wouldn't have lasted much longer to begin with.

The acquisition comes amid GitHub's almost year-long search for a new CEO, as well as its first profit from its services.

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