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Microsoft GitHub deal: Why the $7.5 billion purchase price makes sense #MakerBusiness

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Interesting take on Microsoft’s recent purchase of GitHub from Slate’s Felix Salmon.

Why would Microsoft, a software company that has achieved global dominance through writing proprietary software, spend $7.5 billion on GitHub, a company dedicated to building up a world-beating repository of open-source alternatives? Are they buying it to kill it, a bit like the National Enquirer allegedly did with those tales of Donald Trump’s infidelities?

Not at all: Microsoft is the ideal home for GitHub, and the hefty price tag is merely a sign of how seriously Microsoft CEO Satya Nadella takes GitHub’s mission. Companies can be worth a lot more to a strategic acquirer than they would be on the open market, and GitHub is a prime example.

In that sense, it’s similar to Pret a Manger, the sandwich chain that was sold last week to the wealthy Reimann family for some 1.5 billion pounds. That’s a substantial premium not only to the 345 million pounds private equity firm Bridgepoint bought it for in 2008, but also to the amount that Pret would be worth as a stand-alone company on the stock market.

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