IBM to buy Red Hat becoming world’s No.1 hybrid cloud provider

IBM and Red Hat announced on Sunday that they had reached a definitive agreement regarding IBM’s acquisition of Red Hat. IBM will purchase all of Red Hat’s issued and outstanding common shares for $190 per share in cash. The takeover is worth approximately $34 billion.

International Business Machines Corporation or IBM is an American multinational IT company with headquarters in Armonk, New York. It operates in more than 170 countries and employs approximately 380,000 workers.

Red Hat Inc. is an American multinational software company with headquarters in Raleigh, North Carolina. It has 12,000 workers.

According to IBM, Red Hat is the world’s Number 1 provider of open source cloud software.

Red Hat acquisition a ‘game changer’

IBM Chairman, President, and CEO (Chief Executive Officer), Ginni Rometty, said:

“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.”

“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.”

IBM to acquire Red Hat
IBM’s acquisition of Red Hat is a ‘friendly takeover.’ In other words, Red Hat is happy with the arrangement. The opposite, when the target company does not want to be bought, is a hostile takeover. (Photo of CEOs: prnewswire2-a.akamaihd.net)

Open source ‘the default choice’

President and CEO of Red Hat, 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.”

The two companies say that the acquisition brings together the world’s best hybrid cloud providers. It will enable companies and organizations to move all business applications to the cloud.

Most business workloads not yet in cloud

In a press release, IBM stated:

“Companies today are already using multiple clouds. However, 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.”

“This prevents portability of data and applications across multiple clouds, data security in a multi-cloud environment and consistent cloud management.”

Red Hat’s open governance

IBM says it remains committed to Red Hat’s open governance and open source contributions. It is also committed to Red Hat’s open source community and development model.

Senior Vice President of IBM Hybrid Cloud, Arvind Krishna, said:

“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.”

When the takeover is complete, Red Hat will join IBM’s Hybrid Cloud team, but as a distinct unit. It will preserve the neutrality and independence of its open source development heritage and commitment. It will also preserve its current portfolio, unique development culture, and go-to-market strategy.

Mr. Whitehurst, who will remain as head of Red Hat., will also join IBM’s senior management team. He will report to Ms. Rometty.


Video – What is takeover?

When one commercial enterprise purchases another, we call it a takeover. When two equally-sized business entities fuse together and become one, it is a merger.


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