IBM and Red Hat announced that the companies have reached a definitive agreement under which IBM will acquire all of the issued and outstanding common shares of Red Hat for $190.00 per share in cash, representing a total enterprise value of approximately $34 billion.
Founded in 1993, Red Hat specializes in Linux operating systems and is the world’s leading provider of open source cloud software.
“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,” IBM Chief Executive Ginni Rometty [source]
- Red Hat charges fees to its corporate customers for custom features, maintenance and technical support, offering IBM a lucrative source of subscription revenue
- Red Hat is one of the very few companies in the cloud computing sector that has both revenue growth and free cash flow [source]
“This acquisition we are clearly doing for growth synergies. This is not about cost synergies at all”, Ginni Rometty for Reuters
Red Hat is expected to bring 3 things to IBM: the world’s largest portfolio of open source technology, their innovative hybrid cloud platform, and a vast open source developer community.
Big expectations? Sure, and that’s because this is Big Blue’s biggest deal in its 107 years.
