IBM has announced the acquisition of Red Hat, a leading provider of open-source cloud software. The deal amounts to $34B, making it the third largest US tech acquisition of all time. According to a joint statement, IBM will pay cash to buy all shares in Red Hat at $190, a 63% premium to Friday’s closing share price. Advisors on the buy-side were Goldman Sachs, J.P. Morgan, and Lazard, while Red Hat was guided by Morgan Stanley and Guggenheim.
As a result of the transaction, the acquired company will become a unit of IBM’s Hybrid Cloud division. Ginni Rometty, IBM Chairman, President and Chief Executive Officer claims the acquisition will allow the Company to offer an innovative cloud solution:
The acquisition of Red Hat changes everything about the cloud market – IBM will become the world’s #1 hybrid cloud provider, offering companies the only solution that unlocks the full value of the cloud for their businesses.
Industry experts suggest that IBM’s purchase reflects the objective of the company to counter Amazon and Microsoft’s position in the cloud infrastructure business.
Open source software has been a viral theme in technology this year. Apart from IBM’s transaction, other major tech deals were Microsoft’s $7.5B acquisition of code-sharing service GitHub and Salesforce’s $6.5B acquisition of MuleSoft, whose technology integrates software applications, data and devices. Earlier this October, big-data rivals Cloudera and Hortonworks agreed to merge in a $5.2B deal.
