IBM acquires Red Hat for $34 bn

IBM has completed a multi-billion dollar deal to get hold of the software firm Red Hat. The deal is the largest deal in the history toppling the Microsoft $26 billion deal to acquire LinkedIn in 2016 and Facebook’s deal to acquire WhatsApp in 2014.

IBM paid as much as $34 billion in order to acquire Red Hat and IBM called this deal as a “game-changer” for them and it will make the computing hardware giant one of the biggest and largest hybrid cloud providers.

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[Source: Intel]
The deal has been approved by the boards of both the companies involved and will take place sometime in 2019, with subject to approval by Red Hat’s shareholders.

Ginni Rometty, IBM Chairman, President, and Chief Executive Officer said about the deal that:

The acquisition of Red Hat is a game-changer. It changes everything about the cloud market.

IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.

Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs.

The next 80 percent is about unlocking real business value and driving growth. This is the next chapter of the cloud. It requires shifting business applications to the hybrid cloud, extracting more data and optimizing every part of the business, from supply chains to sales.

IBM has promised that it will not change the open source activity of Red Hat after it takes over the software firm and will allow it to remain committed to Red Hat’s open source activity.

Jim Whitehurst, President, and CEO of Red Hat said that:

Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience – all while preserving our unique culture and unwavering commitment to open source innovation

Both the companies will also continue to work on their previous hybrid cloud partnership which the companies announced about is May which is already worth around $19 billion.

As for the existing partnership between Red Hat and other companies, it will continue to work with its existing partners in the cloud service including Google Cloud, Alibaba, Microsoft Azure, and Amazon Web Services.

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