The purchase makes sense - not only is the majority of Microsoft's developer documentation now hosted on GitHub, but so is numerous company's recent open-source projects like Visual Studio Code and PowerShell.
The deal solidifies Microsoft's recent commitment to open-source software development. The deal is expected to close by the end of the year.
Microsoft shares were up almost 1 percent at a record high of $101.78.
"[.] the real power comes when every developer can create together, collaborate, share code and build on each other's work". And late previous year, GitHub revealed that it would be adopting Microsoft's GVFS tool for managing large-scale source code repositories. Nadella said developers can still use whatever programming languages and operating systems they choose for their projects.
Microsoft's origin story lies in the market for software development tools.
GitHub has billions of lines of code available for open source distribution and forking, and these will now come under the auspices of a company that has until very recently been actively hostile to open source.
In fact, in the early 2000s, Ballmer and his team were highly critical of that kind of a project, calling it a "cancer" and saying that it went against "the American Way". This deal will mark another dramatic step in that direction.
GitHub for its part was reportedly willing to sell itself to Microsoft than going public because it was "impressed" with Microsoft CEO Satya Nadella and how he actively backed programmers and programming initiatives since he took over the reins of the company back in 2014.
Favoured by independent and tech giant software developers alike, the two companies will accelerate enterprise use of Github and hope to bring Microsoft's own developer tools and services to new audiences. Rumors have been in the air for quite some time now of the intentions by Microsoft to seal the deal with respect to buying GitHub this year. Others struck a more serious tone, as they anxious that the deal might mean GitHub becomes closed off to anything but Microsoft technologies. It has been without a chief executive for nearly a year and its revenues have been outpaced by its expenditure, with net losses in the tens of millions. However, it also gained $98 million in nine months of 2016, Bloomberg noted.
GitHub CEO and Co-Founder Chris Wanstrath has also published "A bright future for GitHub" on the GitHub Blog, and also states that Microsoft and GitHub share a common vision. The short version: GitHub will maintain its independence as a wholly-owned subsidiary, but have access to Microsoft's prowess in both engineering and sales.
One person familiar with the discussions between the companies told CNBC that they had been considering a joint marketing partnership valued around $35 million, and that those discussions had progressed to a possible investment or outright acquisition. The LinkedIn purchase remains Microsoft's biggest acquisition to date.