IBM to acquire Linux distributor Red Hat for $33.4 Billion

[Arthur]

Source: Red Hat (via Bloomberg)

 

IBM agreed to acquire software maker Red Hat Inc. in a $33.4 billion bet on jump-starting its efforts to catch up in the cloud.

 

International Business Machines Corp. will pay $190 a share in cash for Raleigh, North Carolina-based Red Hat, according to a statement from the companies Sunday, confirming an earlier Bloomberg News report. That’s a 63 percent premium over Red Hat’s closing price of $116.68 per share on Friday.

 

"The acquisition of Red Hat is a game-changer. It changes everything about the cloud market," said Ginni Rometty, IBM’s chairman and chief executive officer, in the statement.

 

Rometty, 61, has been trying for years to steer the 107-year-old technology giant toward more modern businesses, such as the cloud, artificial intelligence and security software.

 

In its third-quarter results, IBM disappointed investors who were seeking more progress in those areas after six years of declining sales that had only started to show gains earlier this year. The improvements had been coming largely from IBM’s legacy mainframe business, rather than its so-called strategic imperatives.

 

The Red Hat purchase will give IBM an immediate cloud revenue boost growth as well as a suite of proven software products to sell through its global sales force.

 

“We will scale what Red Hat has deeply into many more enterprises than they’re able to get to,” Rometty said in a phone interview.

[Marci]

Good good... as long as they don't destroy CentOS (RHEL-downstream) in the process...!

[Diello]

CentOS isn't the immediate issue, but RHEL is based on Fedora upstream, and a large part of the financial and staffing support for Fedora comes from RH. It seems IBM is more interested in their cloud portfolio than the OS market. It could well see support for Fedora being cut as a part of a lack of focus on RHEL. It could go either way, if IBM truly leave RH as a division to operate autonomously. That said, IBM don't exactly have a sparkling track record here... Lotus anyone? SUSE recently acquired again... Could we see Canonical being brought out by MS?!