IBM Buys “Red Hat” Open-Source Software Company for $34 Billion

Oct 29, 2018

It’s been quite a year for the open source platforms.

Earlier this year, Microsoft acquired popular code repository
hosting service GitHub for $7.5
billion ^[1], and now IBM has just
announced the biggest open-source business deal ever.

IBM today confirmed that it would be acquiring open source Linux
firm Red Hat for $190 per share in cash, working out to a
total value of approximately $34 billion.

Red Hat, known for its Red Hat Enterprise Linux (RHEL) operating
system, is a leading software company that offers open-source
software products to the enterprise community. Even Oracle uses Red
Hat’s source code for its Oracle Linux product.

Red Hat’s last year revenue was $2.4 billion, and this year the
company has earned $2.9 billion. But if Red Hat products are open
source and updates are free, you might be wondering how does the
company earn.

Red Hat was one of the first companies who found a successful
way to make money from free open-source software. It offers
consulting services—including assessments, implementations,
platform migrations, solution integration, and application
development.

IBM Acquires Red Hat to Target Cloud Computing Giants

Like other big tech companies, IBM has also been a major supporter
of Linux and contributor to the kernel and other open source
projects, but the company has been left behind Amazon, Alphabet
(Google) and Microsoft when it comes to cloud computing.

The accusation deal will help IBM expand its reach as an
enterprise cloud computing provider.

“The acquisition of Red Hat is a game-changer. It changes
everything about the cloud market,” Ginni Rometty, IBM Chairman,
President, and Chief Executive Officer said in a statement.

“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.”

^[2]

IBM: Red Hat Will Remain Independent Unit

It is important to be noted that Red Hat will continue to be led by
Red Hat CEO Jim Whitehurst and Red Hat’s current management team,
as before. IBM intends to maintain Red Hat’s headquarters,
facilities, brands, and practices.

“Importantly, Red Hat is still Red Hat. When the transaction
closes, as I noted above, we will be a distinct unit within IBM,
and I will report directly to IBM CEO Ginni Rometty. Our unwavering
commitment to open source innovation remains unchanged,” said James M.
Whitehurst, CEO at Red Hat.

“The independence IBM has committed to will allow Red Hat to
continue building the broad ecosystem that enables customer choice
and has been integral to open source’s success in the
enterprise.”

^[3]

According to IBM, the deal between IBM and Red Hat has already been
approved by both of the companies’ boards of directors, but it is
still subject to Red Hat shareholder and regulatory approvals.

If all goes as planned, the acquisition deal is expected to
close in the second half of 2019.

References

^{^}
GitHub for $7.5 billion
(thehackernews.com)
^{^}
statement
(newsroom.ibm.com)
^{^}
said
(www.redhat.com)

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IBM Buys “Red Hat” Open-Source Software Company for $34 Billion

IBM Acquires Red Hat to Target Cloud Computing Giants

IBM: Red Hat Will Remain Independent Unit

References

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