IBM dons $34-billion Red Hat

IBM has acquired all of the issued and outstanding common shares of Red Hat for $190.00 per share in cash, representing a total equity value of $34 billion.

Red Hat’s open hybrid cloud technologies are now paired with IBM’s innovation and industry expertise, and sales leadership in more than 175 countries.

Together, IBM and Red Hat intend to accelerate innovation by offering a next-generation hybrid multicloud platform. Based on open source technologies, such as Linux and Kubernetes, the platform will allow businesses to securely deploy, run and manage data and applications on-premises and on private and multiple public clouds.

“Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors,” said Ginni Rometty, IBM chairman, president and CEO.

“They need open, flexible technology to manage these hybrid multicloud environments, and they need partners they can trust to manage and secure these systems,” Rometty said. “IBM and Red Hat are uniquely suited to meet these needs.”

Jim Whitehurst, president and CEO of Red Hat, said the deal gives Red Hat the opportunity to bring more open source innovation to an even broader range of organisations.

Red Hat will continue to be led by Jim Whitehurst and its current management team. Whitehurst is joining IBM’s senior management team, reporting to Rometty.

IBM will maintain Red Hat’s headquarters in Raleigh, North Carolina, its facilities, brands and practices. Red Hat will operate as a distinct unit within IBM and will be reported as part of IBM’s Cloud and Cognitive Software segment.

IBM’s cloud revenue has grown from 4% of total revenue in 2013 to 25% today. The Red Hat acquisition is expected to contribute two points of compound annual revenue growth to IBM over a five-year period.

Red Hat will continue to build and expand its partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba.