MICROSOFT & GITHUB

By: Rohan Kottamasu

In the technology sector, mergers and acquisitions are frequently used by businesses to grow and obtain a competitive advantage The purchase of GitHub by Microsoft (NASDAQ: MSFT), which was announced on June 4, 2018, and was eventually finalized on October 25, 2018, was one notable deal that attracted the attention of many in the tech community. GitHub is a web-based hosting service for software development projects that use the Git version control system On the other hand, Microsoft is a global technology business that focuses on creating hardware, software, and cloud services. The purchase ranked as Microsoft's seventh-largest acquisition to date with a $7.5 billion equity value.

Due to the fact that GitHub was a privately owned business prior to the announcement, there was no share price to monitor But 20 days after the announcement, the price of Microsoft's stock dropped 4.05%, suggesting skepticism among investors However, after the purchase was finalized, Microsoft's share price grew by 6.5% overall and kept rising steadily. The goal of the acquisition was crystal clear: Microsoft wanted to increase its developer community footprint and enhance its developer-focused offerings. With over 28 million developers using the platform to collaborate and share code, GitHub was the biggest code host in the world. Microsoft got access to a sizable developer community and their valuable code contributions by purchasing GitHub

Microsoft demonstrated their keen interest in acquiring the business by paying a premium of 275% over GitHub's most recent private valuation at the time of the transaction For context, in its most recent fundraising round in 2015, GitHub raised $350 million, which valued the business at $2 billion. Microsoft’s acquisition of GitHub was set up as an allstock exchange, with no cash or debt exchanged. Additionally, a number of banks were involved in the transaction, including Qatalyst Partners, who advised GitHub, and Morgan Stanley and JPMorgan Chase, who served as financial advisers to Microsoft. In the current technology market, Microsoft is doing well. Microsoft's stock price is $287.23 and its EPS (P/E) ratio is 3283 as of April 3, 2023 Microsoft's acquisition of GitHub has been effective, as the company has integrated GitHub's services into its Azure cloud platform and provided new developer features. Github was integrated into Microsoft’s intelligent cloud segment, which has been steadily increasing by 20% in revenue per year on average.

Compared to their competition, such as Apple, Google, and other technology companies that are all trying to get into the healthcare space, Microsoft has an edge because of the already established connections that Nuance has with As for suggestions, Microsoft should keep funding GitHub and the developer group Microsoft's recent success has been largely attributed to its emphasis on open-source software and collaboration, and the purchase of GitHub has only consolidated its place in these markets Microsoft should also keep developing and enhancing its developer-focused services to remain ahead of rivals like Amazon Web Services and Google Cloud Platform In conclusion, Microsoft's acquisition of GitHub was a significant and effective business transaction in the technology sector that enabled Microsoft to strengthen its developerfocused offerings and increase its presence in this area.