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IBM to Acquire Red Hat in $34 Billion Stock Deal

On Sunday IBM Corp. announced its plans to acquire leading enterprise open source software provider Red Hat Inc.

IBM and Red Hat said the $34 billion stock deal should be completed in the latter half of 2019, once Red Hat shareholder and regulatory approval is complete. Both companies' boards have approved the acquisition, which has been described by IBM as the most significant tech acquisition of 2018.

Paul Cormier, Red Hat's EVP and president of Products and Technologies, said the merger will help his company realize its vision for its Linux and open source offerings.

"Over the past 10 years or so, Linux has been the platform where most of the innovation in the enterprise has been happening," Cormier said in a Monday morning conference call with analysts and press. "We built a purposeful portfolio around Linux and open source tailored for the hybrid cloud ... But we're still a relatively small company. Our customers are seeing open hybrid cloud as the only way to bring public cloud into their IT infrastructure, and because of our size we can't recognize the potential of that demand. IBM helps us bring that strategy to 170 countries and accelerates our vision into the market."

IBM has long been a leading user and contributor to Linux, which undergirds Red Hat's top products, including the Red Hat Enterprise Linux (RHEL) OS.

On that same conference call, Arvind Krishna, IBM's SVP of Hybrid Cloud, said this acquisition will make his company the world's leading hybrid cloud provider. IBM's goal, he said, "is to win in hybrid cloud, and win on the basis of open technologies, and in the end to provide a technology that makes life easier [for companies] with less complexity and a future proof investment."

Red Hat President and CEO Jim Whitehurst predicted great things for the combined company in the ongoing cloud wars, again in the hybrid space. "Imagine us helping even more customers benefit from the choice and flexibility afforded by hybrid and multi-cloud. Joining forces with IBM offers all of that, years ahead of when we could have achieved it alone. Together we can become *the* leading hybrid cloud solutions provider."

About the Author

John K. Waters is the editor in chief of a number of Converge360.com sites, with a focus on high-end development, AI and future tech. He's been writing about cutting-edge technologies and culture of Silicon Valley for more than two decades, and he's written more than a dozen books. He also co-scripted the documentary film Silicon Valley: A 100 Year Renaissance, which aired on PBS.  He can be reached at jwaters@converge360.com.


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