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Microsoft’s $7.5 Billion GitHub Deal: 5 Things to Know

Microsoft announced its $7.5 billion GitHub acquisition in June 2018 and completed it that October. Five key facts explain the price, rationale, commitments and accounting detail.
From TheFinanceBase Team2 min to read
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Microsoft announced its agreement to acquire GitHub for $7.5 billion in Microsoft stock on June 4, 2018, and said it completed the acquisition on October 26, 2018. The deal paired a clear headline price with strategic goals and public promises to developers; Microsoft’s later accounting description adds detail without replacing that announced figure.

1. Microsoft announced a $7.5 billion stock deal

On June 4, 2018, Microsoft announced a definitive agreement to acquire GitHub for $7.5 billion in Microsoft stock. Microsoft’s 2018 Annual Report also described the agreement as an all-stock transaction. The announcement described GitHub as a place where more than 28 million developers learned, shared, and collaborated; that was Microsoft’s count at the time, not a current user figure. Microsoft’s June 4, 2018 announcement and its 2018 Annual Report document the announced terms.

2. Microsoft said it wanted to expand its reach with developers

Microsoft framed the acquisition around three aims: empowering developers throughout the development process, accelerating enterprise use of GitHub, and bringing Microsoft’s developer tools and services to new audiences. These were the company’s stated reasons for pursuing the deal, not evidence by themselves that the goals were achieved.

CEO Satya Nadella said at the announcement: “Microsoft is a developer-first company, and by joining forces with GitHub we strengthen our commitment to developer freedom, openness and innovation.”

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3. Microsoft made public commitments about GitHub’s openness

Microsoft said GitHub would retain its developer-first ethos, operate independently, and remain an open platform. It also said developers could continue choosing their programming languages, tools, operating systems, cloud providers, and devices. In the announcement, Microsoft stated: “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.”

These were commitments made in 2018. The announcement does not establish how every commitment was implemented over time or describe GitHub’s current governance and operations.

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4. The acquisition closed on October 26, 2018

The agreement was subject to GitHub shareholder approval, regulatory approvals, and customary closing conditions. Microsoft announced that the acquisition had been completed on October 26, 2018. The announcement date and the closing date are distinct milestones: the agreement was announced in June, then completed after the stated conditions. Microsoft’s completion announcement confirms the closing date.

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5. A later filing adds cash-payment detail to the headline figure

Microsoft’s 2020 Annual Report described the completed transaction as a $7.5 billion stock transaction, inclusive of $1.3 billion in cash payments related to vested GitHub equity awards and an indemnity escrow. That filing detail explains components included in its later transaction description; it does not change the $7.5 billion headline consideration Microsoft announced in 2018. Microsoft’s 2020 Annual Report provides the later accounting description.

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