Why did IBM acquire Red Hat

Mega deal: IBM takes over Red Hat

The US computer giant IBM is taking over the software manufacturer Red Hat for around 34 billion US dollars (almost 30 billion euros). IBM wants to buy all shares of Red Hat for a unit price of 190 US dollars, the company announced on Sunday. Red Hat should therefore become part of IBM's hybrid cloud division, but retain its independence. Red Hat CEO Jim Whitehurst remains on board and reports directly to Ginny Rometty as a member of IBM's top management.

IBM pays for Red Hat well above its share price: Red Hat's shares were quoted at around 116 US dollars at the close of trading on Friday, which means that the company was valued at around 20.5 billion US dollars. "This acquisition will completely transform the cloud market," said Rometty. "This makes IBM number one." The IBM boss still sees great potential in the cloud, which IBM wants to exploit.

Biggest deal for IBM

"Open source is the number one choice for today's IT solutions, and I'm incredibly proud of the role Red Hat played in bringing it to the enterprise market," added Whitehurst. Together with IBM, Red Hat could offer open source software to an even larger group of customers. "In doing so, we preserve our unique culture and our unwavering commitment to open source."

The mega-deal is the largest for IBM to date and one of the largest acquisitions in the US tech sector. Aside from the $ 165 billion merger between AOL and Time Warner in 2000, the biggest tech deals to date were the takeover of storage specialist EMC by Dell two years ago ($ 67 billion) and the takeover of SDL by JDS Uniphase (JDSU) in 2000 ($ 41 billion).

Update October 28th: The boards of directors of both companies have already agreed on the takeover. In addition, the approval of Red Hat shareholders and investors is required. The US regulatory authorities also have a say. The companies do not expect the deal to be concluded before the second half of 2019. (vbr)

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