Cloud IBM

IBM to acquire Red Hat in $34 Billion deal

IBM has acquired Red Hat, the world’s leading provider of open source cloud software in a $34 Billion Dollar deal.  Ginni Rometty, IBM Chairman, President and CEO believes the acquisition will enable IBM will become the world’s #1 hybrid cloud provider.

The company has previously been criticized for being sluggish to adopt cloud related technologies compared with key players such as
Amazon, Microsoft and Google. 

Ginni Rometty has commented, “The acquisition of Red Hat is a game-changer. It changes everything about the cloud market.”

“Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs,” she said. “The next 80 percent is about unlocking real business value and driving growth. This is the next chapter of the cloud. It requires shifting business applications to hybrid cloud, extracting more data and optimizing every part of the business, from supply chains to sales.”

“Open source is the default choice for modern IT solutions, and I’m incredibly proud of the role Red Hat has played in making that a reality in the enterprise,” said Jim Whitehurst, President and CEO, Red Hat. “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.”

This acquisition, IBM believes, will bring together the best-in-class hybrid cloud providers and will enable companies to securely move all business applications to the cloud. Although the adoption to the cloud is thought to be gaining momentum, research shows that 80 percent of business workloads have yet to move to the cloud, held back by the proprietary nature of today’s cloud market.

The acquisition is slated to accelerate IBM’s revenue growth, gross margin and free cash flow within 12 months of closing. It was noted that the acquisition had been approved by the boards of directors of both IBM and Red Hat. It is subject to Red Hat shareholder approval, regulatory approvals and other customary closing conditions. It is expected to close in the latter half of 2019.