IBM has made public its desire to acquire Red Hat for $34 billion in all cash deal. As per the joint statement issued by both the companies, IBM would doll out $190 for each share of Red Hat. The acquisition is also touted as the largest software acquisition ever with the Microsoft acquisition of LinkedIn coming far second with total fund involved at $26.2 billion.
Back to Roots
IBM sort of lost its way over past few years as the company looked desperate to venture in the areas where it was not a leader. Areas such as Artificial Intelligence and Blockchain took the centerstage but historically the company was always an enterprise services player and excelled in it.
Those living in Linux world might not be alien to Red Hat as the company holds a prestigious position in the cloud computing and the Linux ecosystem. Red Hat is known for its platform-as-a-service provider OpenShift which is a stark competitor to the Salesforce-owned Heroku and Google App Engine. Further, Red Hat owns and develops Red Hat Enterprise Linux (RHEL), known for its widespread deployment in the commercial space such as servers, Supercomputers and so on.
Both Companies delighted
About the development, IBM CEO Ginnin Rometty stated that, “The acquisition of Red Hat is a game-changer. “It changes everything about the cloud market. IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”
Red Hat CEO Jin Whitehurst also seemed quite delighted with the development stating that, “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.”
Red Hat posted full-year revenues at $2.9 billion, an increase of 21% year and profit for the company came in at $259 million. IBM on the other hand reported full-year numbers at $79.1 billion in revenues and profit came in flat at $5.8 billion.