IBM Acquires Red Hat for $34 Billion to Become World's Top Hybrid Cloud Provider

In what has been called the most significant tech acquisition of 2018, IBM revealed today it will buy Linux distributor Red Hat in a deal valued at approximately $34 billion that the information multinational hopes will see it become the world's top hybrid cloud provider. The tech giant will be purchasing all of Red Hat's issued and outstanding common shares for $190.00 per share in cash.

IBM to acquire @RedHat, the world’s leading provider of open source technology, becoming the #1 hybrid cloud provider: https://t.co/smktkx4aFw #IBMCloud pic.twitter.com/gUPHaK7Vlt

— IBM (@IBM) October 28, 2018

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

Targeting the next 80 percent

“Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs,” Rometty added. “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.”

The move will aim to establish the hybrid cloud provider solutions that IBM believes will finally offer companies the option to securely move all business applications to the cloud. The hope is to address the proprietary issues plaguing today’s cloud market that have so far hindered the portability of data across multiple clouds as well as effective multi-cloud security and management.

A commitment to the freedom of open source

IBM also emphasized that it would remain committed to Red Hat’s open governance policy. The multinational aims to further support the software firm's long-standing open source contributions and continue to promote its widespread developer ecosystem.

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Both companies together will actively work to foster the continued freedom of open source. “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,” said Jim Whitehurst, President and CEO, Red Hat.

“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," Whitehurst added.

In a blog post on Red Hat's site, executive vice president and president products and technologies Paul Cormier called the deal "a banner day for open source."

"The largest software transaction in history and it’s an open source company. Let that sink in for a minute. We just made history," wrote the enthusiastic executive.