IBM has just made the most significant purchase in its history as the renowned technology company acquired Red Hat, the famous open source company, for $34 billion, in an attempt to diversify its hardware and consulting businesses with products and services that generate higher profitability.
That is also the third most significant acquisition in the United States in the area of technology. IBM announced the news through a press release while Red Hat informed about the purchase through its Twitter account.
IBM currently has a market capitalization of $114 billion and will pay $190 in cash for each share of Red Hat, that is, 62% above the closing price of the value of the shares of the free software company last Friday.
“Joining forces with IBM will give us a greater level of scale, resources, and capabilities to accelerate the impact of open source as the foundation for digital transformation and bring Red Hat to an even wider audience while preserving our unique culture and an unwavering commitment to open source innovation,” said Jim Whitehurst, Red Hat CEO.
IBM Acquired Red Hat For $34 Billion, But Red Hat Would Remain the Same Open Source Company
Red Hat will maintain its independence and operate as a distinct unit within the IBM Hybrid Cloud team. A hybrid cloud is an integrated service that uses both in-house and third-party clouds to solve different functions within an organization.
“IBM will become the world’s first provider for hybrid clouds, providing companies with the only open cloud solution that will unlock the full value of the cloud for their business,” said Ginni Rometty, the IBM CEO, who also believes that the Red Hat acquisition will change the technology and cloud landscape.
IBM’s purchase of Red Hat means that the company would finally be able to compete with other tech businesses that offer cloud services, such as Amazon, Alphabet, and Microsoft. Both IBM and Red Hat expect to close the transaction during the second half of 2019.