IBM has agreed to acquire Red Hat for $190 per share in cash in the biggest Linux or open-source business deal ever. It is Red Hat's hybrid cloud platform, rather than Linux, that IBM wants.

This is made clear in the joint press release from IBM and Red Hat in which IBM CEO Ginni Rometty stated:

"The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. IBM will become the world's number one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses."

Rometty goes on to note that most companies are only 20% along their cloud journey and that the next 80% is about unlocking real business value and driving growth saying that the next chapter of the cloud, which the press release describes as an emerging $1 trillion growth market:

"requires shifting business applications to hybrid cloud, extracting more data and optimizing every port of the business, from supply chains to sales."

The purchase of Red Hat provides IBM with physical servers, its operating system and applications. Red Hat will operate as a distinct unit within IBM's Hybrid Cloud team and will continue to be led by Jim Whitehurst, its CEO, and the current management team.  According to Arvind Krishna, Senior Vice President, IBM Hybrid Cloud:

IBM is committed to being an authentic multi-cloud provider and we will prioritize the use of Red Hat technology across multiple clouds, In doing so IBM will support open source technology wherever it runs, allowing it to scale significantly within commercial settings around the world.

Commenting on the acquisition, Jim Whitehurst said:

"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. 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."

Although Red Hat's management is happy with the situation, the company's employees, who were taken by surprise by the news, seem less so, fearing a clash of culture.

 

More Information

IBM to acquire Red Hat - Press Release

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