IBM Buys Red Hat in $34bn to Stay Ahead in the Cloud War


To lead in hybrid multi-cloud market, IBM is to buy open-source software Red Hat. Red Hat’s CEO Jim Whitehurst will continue to lead the organization

IBM will be acquiring enterprise Linux maker Red Hat for $34bn (£27bn).

“The acquisition of Red Hat is a game-changer, “ says IBM CEO Ginni Rometty, “IBM will become the world’s No. 1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

Hybrid cloud means interlinked private/public clouds coupled to in-house data centres.

IBM, once was a prospective leader of the cloud market, but was left behind in the race with other cloud service providers Amazon and Microsoft. But with the Red Hat acquisition, IBM is again in the market giving tough competition to its peers. Red Hat’s shares have grown 170% in the last five years.

Meanwhile, Red Hat CEO Jim Whitehurst offered: “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.”

Red Hat CEO Jim Whitehurst and the current management team will continue to lead Red Hat says IBM, retaining the Red Hat HQ and brands.

IBM proposed an offer of $190 per issued and outstanding Red Hat share, which was approved; the current price is $116. If it is successful, Red Hat will be absorbed into IBM’s Hybrid Cloud unit.

Both Red Hat and IBM are the big supporters of Linux, contributing to the kernel and its surrounding software. IBM was among the big names in business that came to the Linux world’s rescue when it was being menaced by patent trolls and Microsoft. IBM wants to transform itself into hybrid cloud platform, rather than be seen eternally as a maintainer of legacy mainframes and databases.


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