IBM and Red Hat have announced an agreement that IBM has struck a deal to acquire the Linux and open source software distributor for $34 billion in an all-cash transaction of $190/share.
This announcement is the largest software company acquisition to date. Following the acquisition, Red Hat will continue to operate as a distinct unit in IBM’s Hybrid Cloud team.
In the past years, Red Hat has been able to continuously generate profits by mastering its Linux and open source software distribution strategy. Since Linux is the preferred operating system when it comes to cloud computing, it makes sense for IBM to join hands with Red Hat and strengthen its enterprise offerings. It’s worth noting that, on the other hand, IBM has been relying on heavily on its Watson AI and its marketing gimmicks in the recent times.
Overall, this step is being seen as a move by IBM to establish itself as a bigger force in the hybrid cloud market. With this development, the IBM CEO Ginni Rometty hopes to make IBM the world’s #1 hybrid cloud provider, offering the only open cloud solution with “full unlocked value.”
While IBM’s current position as a public cloud provider doesn’t seem that impressive as compared to Amazon, Microsoft, and Google, the company plans to offer their combined technology to link their in-house cloud and other third-party cloud solutions.