One of the oldest and most famous tech companies in the world, IBM (International Business Machines Corporation) is officially acquiring Red Hat, a cloud software company, for $34 billion.
According to IBM, Red Hat is the “world’s leading provider of open source cloud software”. It’ll acquire the company at $190 per share, 60% above Red Hat’s closing stock price of $116.68 last Friday.
Red Hat was doing well back in June when its share price swelled to $175. However, its share price fell in the next few months after that, due to poor earnings and a volatile market.
IBM will be retaining Red Hat’s open source community and development platform, with open governance, continuing to foster the developer ecosystem.
Jim Whitehurst (CEO Red Hat) will continue at his current position, heading the management at Red Hat. He will join IBM’s upper management and will be reporting directly to Ginni Rometty, CEO IBM. The company’s current facilities, products, and HQ will also be retained.
Ginni Rometty, commenting on the acquisition, said,
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,” she continued.
Jim Whitehurst of Red Hat added,
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.
It’s important to mention here that IBM and Red Hat have partnered for over 20 years. IBM was one of the earliest supporters of Linux, helping develop and promote enterprise-level Linux with Red Hat. They’ve also collaborated on bringing hybrid cloud computing solutions to consumers.