Microsoft and GitHub, the popular developer tools platform, have agreed to an acquisition and the deal could be announced as soon as Monday.

Acquiring GitHub Inc would be both a return to the company’s earliest roots and a sharp turnaround from where it was a decade ago.

A combination of both companies would make a lot of sense from a product and customer perspective, and it could provide stability for GitHub, which has found ways to monetize its popular products more challenging than expected and suffered a lot of turnover in its executive ranks.

Deal Talks

Microsoft has had talks with GitHub, which hosts 27 million software developers working on 80 million repositories of code, on and off for a few years.

Lately, they started having talks about a partnership but progressed to discussing an acquisition, according to a person familiar with the situation.

GitHub, the code-repository company popular with many software developers, chose the software maker partly because of CEO Satya Nadella. Terms of the agreement weren’t known on Sunday. GitHub was last valued at $2 billion in 2015.

Right now, the Redmond-Washington-based Microsoft is one of the biggest contributors to GitHub, and as Nadella moves the company away from complete dependence on the Windows operating system to more in-house development on Linux, the company needs new ways to connect with broader developer community.

“Developers, developers, developers”

Microsoft’s origin story lies in the market for software-development tools.

Decades before former Chief Executive Officer Steve Ballmer jumped up and down on a stage, cheering for “developers, developers, developers,” Bill Gates and Paul Allen co-founded the company to give hobbyists a way to program a new micro-computer kit, the MITS Altair.

However, even as Ballmer celebrated the developers building proprietary software for Microsoft, in the early 2000s he and his executive team were highly critical of the kind of open-source program built in GitHub today.

Open-source software allows developers to tinker with, improve upon and share code – an approach that threatened Microsoft’s business model.

A lot has changed since then, and under CEO Nadella, Microsoft is supporting many flavors of Linux and has used open-source models on some significant cloud and developer products itself.

Coding Site GitHub


The San Francisco-based GitHub is an essential tool for coders. Many corporations, including Microsoft and Google, use it to keep their corporate code and to collaborate. Also, it’s a social network of sorts for developers.

Still, GitHub’s losses have been significant as it lost $66 million over three quarters in 2016 and it has been hunting for a new CEO for nine months. The company had revenue of $98 million in nine months of 2016.

In August last year, GitHub announced that it was looking for a CEO to replace Chris Wanstrath, one of the company’s co-founders.

In the interim, GitHub’s Chief Business Officer Julio Avalos joined the company’s board of directors and took over much of the day-to-day leadership of the company.

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