On Monday, Microsoft agreed to spend US$7.5 billion to acquire the GitHub code hosting platform. However, Microsoft is not the only company that has tried to acquire GitHub. According to informed sources, in the past few weeks, Google representatives have also discussed acquisitions with GitHub.
It is reported that the negotiations for the acquisition of GitHub have continued for several weeks. In the end, Microsoft gave a very high bid and successfully blocked Google. In the past, GitHub has also attracted the interest of companies such as Amazon.
According to informed sources, GitHub’s annual revenue is approximately US$300 million, and Microsoft’s purchase price is 25 times of its revenue. In August last year, GitHub stated that it had an annualized return of $200 million. In October last year, it claimed that it was expected to generate more than $100 million in revenue a year for only one enterprise product.
Google and Microsoft declined to comment.
In recent years, Microsoft’s dominant market share of Windows is declining, forcing Microsoft to seek other ways to attract developers. The acquisition of GitHub and the professional social networking site LinkedIn means that Microsoft now has two top professional websites, which is crucial for it to attract scarce tech talent.
Although Google Cloud Services is under development under the leadership of Diane Greene, the company has so far not conducted any major acquisitions in this area. This is in stark contrast to Microsoft, which has acquired GitHub and LinkedIn. Its price for acquiring LinkedIn is as high as $26 billion.
The cloud application company Salesforce also gained development through acquisitions. Recently, it spent $6.5 billion to acquire Mulesoft, a company whose technology can help software developers integrate different applications.
According to informed sources, GitHub founder and former CEO Chris Wanstrath had a good relationship with Microsoft CEO Satya Nadella. Since he led Microsoft four years ago, Nadella has been supporting open source software and programming tools to promote development and attract third-party developers. Chris also intends to provide its tools to developers for free.
According to informed sources, over the years, GitHub has been the target of many companies (such as Microsoft, Google and Amazon, etc.).
In recent years, companies such as Atlassian based in Australia and the United States and Tencent in China have expressed their willingness to purchase.
"People have long been interested in acquiring GitHub. “Lee Peter Levine, partner of venture capital firm Andreessen Horowitz, said,” GitHub has many options, but it is strategically aligned with Microsoft. "Levin did not give the name of the company intending to acquire GitHub.
In a blog post on Monday, Levin wrote that in 2012, Andreessen Horowitz invested $100 million in GitHub, which is “the largest check we’ve ever issued”. In 2015, GitHub conducted another round of financing activities with a valuation of US$2 billion. The financing activity was led by Sequoia Capital.
In the past 24 months, Nadella has won Wanstras's favor for GitHub's strategic vision for Microsoft. GitHub's new CEO, Nat Friedman, currently plans to operate GitHub independently, just as Microsoft has let LinkedIn run independently, despite the fact that GitHub will eventually become Microsoft with products like Office 365 and Dynamics 365. Part of business cloud business.
Friedman said that, in any case, Microsoft wants GitHub to do what it is good at.
Vancestras said that GitHub has negotiated with Microsoft for several years and the two companies have a common mission to help developers become more efficient.