IBM to acquire NC-based Red Hat for $34 billion

IBM to acquire NC-based Red Hat for $34 billion

IBM to acquire NC-based Red Hat for $34 billion

The deal ー at $190 per share ー represents a more than 60 percent premium over Red Hat's Friday closing price of $116.68 and indicates just how seriously blue-chip legacy tech companies are taking the ongoing transition to cloud computing.

IBM said Sunday it will pay $190 in cash for each share of Red Hat under the deal that is expected to conclude in the latter half of next year, subject to approvals by Red Hat shareholders and regulators.

Shares in the company fell four percent at the start of trading in NY on Monday.

Within the terms of the deal, IBM has said it will remain committed to Red Hat's open source community and its developer ecosystem.

Here's what Rometty told investors on Monday. But that version of Linux is available only on Amazon, and if the business wants to run software on another cloud they would have to ensure it works with a different version of Linux there.

Adhering to the adage of not fixing what's not broken, Red Hat will continue to operate as a separate unit.

The 107-year-old computer-services giant, once synonymous with mainframe computing, has been slow to adopt cloud-related technologies and has had to play catch-up to market leaders Inc. and Microsoft offering computing and other software and services over the internet.

At the same time, sales last quarter overall missed analysts' expectations and the forecast for the current quarter also fell short, fueling concerns Red Hat may be losing deals to rivals and growth may be slowing.

However, investors apparently don't like the deal from an IBM (NYSE: IBM) perspective.

Speaking alongside Krishna, Red Hat's ($RHT) vice president of product Paul Cormier said the acquisition will allow the 25-year-old company to scale into a truly global business. "It changes everything about the cloud market", Ginni Rometty, IBM chairman, president and chief executive officer said in a statement.

Ms Rometty added that most companies are now being held back in their cloud transformation due to closed platforms. Morgan Stanley and Guggenheim Partners were financial advisers to Red Hat, while Skadden Arps Slate Meagher & Flom provided legal advice. With a RedHat acquisition, IBM would have a leading Kubernetes and container-based cloud-native development platform, and a much broader open source middleware and developer tools portfolio than either company separately. "The next 80 percent is about unlocking real business value and driving growth". Together, they will help clients create cloud-native business applications faster, drive greater portability and security of data and applications across multiple public and private clouds, all with consistent cloud management.

IBM is no stranger to Linux or to Red Hat.

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