Technology major Microsoft has announced plans to acquire software developer platform GitHub in a deal valued at $7.5 billion on Monday. GitHub was valued at $2 billion in its last funding round in 2015, though it has yet to turn a profit. Microsoft has seen its once-dominant Windows unit slip in market share in recent years, spurring a cloud-first reorganization and sending Microsoft looking for alternatives to court developers.

Microsoft CEO Satya Nadella said in a statement that Microsoft is a developer-first company, and by joining forces with GitHub they will strengthen their commitment to developer freedom, openness and innovation. Microsoft vice president Nat Friedman will assume the role of GitHub CEO, the company said as he takes over for the developer platform’s founder Chris Wanstrath, who stepped down 10 months ago.

Wanstrath recently said that the future of software development is bright, and he is thrilled to be joining forces with Microsoft to help make it a reality. Microsofts focus on developers lines up perfectly with GitHub, and their scale, tools and global cloud will play a huge role in making GitHub even more valuable for developers everywhere.

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.

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

GitHub has more than 23 million individual users in more than 1.5 million organizations. It was on track to book more than $200 million in subscription revenue, including more than $110 million from companies using its enterprise product, GitHub told CNBC last fall. The platform has been named to CNBC’s Disruptor List five times.

GitHub’s financials will be reported under Microsoft’s Intelligent Cloud segment. The tie-up will accelerate enterprise use of GitHub and bring Microsoft’s developer tools and services to new audiences.

Microsoft doesn’t expect to make money off the deal until 2020 but said it will have a minimal negative impact on earnings. Talks to acquire GitHub were first reported Friday by Business Insider. The deal is expected to close by the end of 2018, Microsoft said.

About the author

Snigdha Kacker