Tech giant IBM today announced that the company have reached to a “definitive” agreement with Red Hat to acquire all of its issued and outstanding common shares. At $190 per share, Red Hat is being valued at $34 billion approximately. Identifying this to be a “significant” tech acquisition of 2018, IBM is focusing on becoming the world’s leading cloud provider which is an emerging market that’s being values at $1 trillion.
It is important to note that, Red Hat is an open source, enterprise IT services provider, popularly know for it’s Linux operating system distribution. This acquisition of an open source enterprise by IBM may have a huge impact within the open source community. However, emphasizing on the long standing (20 years) partnership between this two company, IBM assured to continue their support for the open source community. IBM had been an early supporter of Linux which helped Red Hat to become an Enterprise grade Linux software.
It is being expected that this new enhanced partnership will benefit the major cloud service providers like Amazon, Web Services, Microsoft Azue, Google Cloud, Alibaba and IBM’s very own cloud services. On the other hand Red Hat will benefit from the financial resources of IBM along with scaling up their enterprise IT solutions globally.
Focusing on the emerging Cloud market, IBM Chairwoman Ginni Rometty stated:
Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs, 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.
Up until now, this acquisition has been approved by both the companies board of directors. However, Red Hat still needs the approval from it’s shareholders and the regulatory body. If everything goes smoothly this deal will be closed by the latter half of 2019.