IBM and Red Hat announced that they have reached an agreement for IBM to acquire the Linux and open source software distributor for $34 billion, in a cash transaction of $190 per share.
This announcement is the largest acquisition of a software company to date. Following the acquisition, Red Hat will continue to operate as a separate unit within IBM's Hybrid Cloud group.
In recent years, Red Hat has managed to consistently make profits by managing its Linux and open source software distribution strategy. Given that Linux is the preferred operating system when it comes to cloud computing, it makes sense for IBM to join forces with Red Hat and strengthen its enterprise offerings. It is worth noting that, on the other hand, IBM has been relying heavily on Watson AI and its marketing gimmicks lately.
Overall, this step is seen as a move by IBM to establish itself as a major force in the hybrid cloud market. With this development, IBM CEO Ginni Rometty hopes to make IBM the #1 hybrid cloud provider in the world, offering the only open cloud solution with “full unlocked value.”
While IBM's current position as a public cloud provider doesn't look impressive compared to Amazon, Microsoft, and Google, the company plans to offer the combined technology to connect its cloud and other third-party cloud applications.
