IBM buys software company Red Hat for US$34b

IBM buys software company Red Hat for US$34b

IBM buys software company Red Hat for US$34b

IBM (NYSE:IBM) and Red Hat (NYSE:RHT) jointly announced today that IBM would be acquiring Red Hat in a deal valuing the company at $190 per share, representing a staggering nearly 63% premium on Red Hat's closing price Friday.

IBM hopes the acquisition will help it expand its position in the enterprise cloud computing market to better compete with the likes of Amazon, Google and Microsoft. "IBM is committed to being an authentic multi-cloud provider, and we will prioritize the use of Red Hat technology across multiple clouds", Arvind Krishna, senior vice president of IBM Hybrid Cloud, said in a statement.

IBM agreed to acquire software maker Red Hat Inc. for $33.4 billion in the biggest-ever acquisition for the computer-services giant. I suppose IBM could be a great Red Hat owner from a financial standpoint, but IBM's leadership has been questionable over the years.

"Today is a banner day for open source".

"With this acquisition, IBM will remain committed to Red Hat's open governance, open source contributions, participation in the open source community and development model, and fostering its widespread developer ecosystem". The largest software transaction in history and it's an open-source company.

At this stage, there have been no announcements as to staffing changes locally or worldwide.

If you can't be a big public cloud provider why not simply manage them?

"Powered by IBM, we can dramatically scale and accelerate what we are doing today", Red Hat president and CEO Jim Whitehurst wrote in an email to employees today. Red Hat has been seen as the gold standard for providing services and support for open-source in a financially sustainable way.

Finally, the firms say that Red Hat will remain independent.

Microsoft completed its $7.5 billion acquisition of open source software company GitHub just two days ago.

IBM and Red Hat are no strangers, having been partners for two decades. With that said, IBM has always been an open source proponent, so maybe it will work out well. That's a 63 percent premium over Red Hat's closing price of $116.68 per share on Friday.

Although the deal was approved by both companies' boards, it's not expected to close until well into next year. Hell, Red hat is a billion dollar company - yes, billion with a "B".

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