The Microsoft-GitHub deal, explained

By Elton Gomes

After significant deliberation, Microsoft has acquired software developer platform GitHub for $7.5 billion. GitHub is Microsoft’s second big acquisition after the company purchased LinkedIn for $26 billion two years ago.

The Verge reported that GitHub will now be headed by Microsoft Vice President Nat Friedman. GitHub co-founder and Chief Executive Officer Chris Wanstrath will now become a technical fellow at Microsoft and will report to the Microsoft’s Artificial Intelligence Chief Scott Guthrie.

Microsoft Chief Executive Officer Satya Nadella emphasized on freedom for developers in a statement,“Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovation.”

GitHub’s co-founder Wanstrath said he looked forward to the merger, “The future of software development is bright, and I’m thrilled to be joining forces with Microsoft to help make it a reality,” he said. Wanstrath added, “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,” as reported by CNBC.

GitHub and its benefits

Microsoft felt the need to purchase a platform like GitHub after killing its own product named Codeplex. GitHub has been gaining popularity among developers and companies who host entire projects, documentation, and code. Further adding to GitHub’s popularity is the fact that it is used by prime technology companies such as Apple, Amazon, and Google. In addition, approximately 28 million developers contribute to 85 million repositories hosted on GitHub.

By acquiring GitHub, Microsoft could be going back to its roots as the company’s origin story lies in the market for software development. Although Microsoft has mentioned previously that it did not believe  in open source sharing, the company certainly wants to have a healthy relationship with coders.

Making millionaires

According to a Bloomberg report, the all-stock deal equates to 73.8 million Microsoft shares. Roughly half of these shares will be acquired by GitHub’s three founders. This is sufficient reason for GitHub to celebrate. The windfall will reportedly make billionaires of Tom Preston-Werner, Chris Wanstrath, and P.J. Hyett.

Assuming that all three of Github’s founders control equal stakes in the platform, each of them could stand to receive roughly 12.3 million Microsoft shares. A 0.16 percent holding would then give each of them 10 time more shares than those owned by CEO Satya Nadella, and 14 times more than the shares of President Brad Smith, as reported by Bloomberg.

According to Forbes, Wanstrath is estimated to receive as much as $1.5 billion in Microsoft stocks. GitHub’s other founders Tom Preston-Werner might receive $1.25 billion, while P.J. Hyett is estimated to walk away with Microsoft stocks close to $1 billion.

Elton Gomes is a staff writer at Qrius