Technology major IBM has announced it will acquire Open Source Solutions leader Red Hat for a massive $34 billion.
The acquisition, IBM's biggest so far, will provide open approach to Cloud, featuring unprecedented security and portability across multiple clouds, a joint statement said late on Sunday, 28 October.
The deal, once goes through, will make IBM top Hybrid Cloud provider in an emerging $1 trillion growth market. Red Hat will operate as a distinct unit within IBM's Hybrid Cloud team.
"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.
IBM will acquire all of the issued and outstanding common shares of Red Hat for $190 per share in cash, representing a total enterprise value of approximately $34 billion.
Most companies today are only 20 per cent along their cloud journey, renting compute power to cut costs.
"The next 80 per cent 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 optimising every part of the business, from supply chains to sales, informed Rometty.
IBM and Red Hat will be positioned to accelerate Hybrid multi-cloud adoption. IBM's and Red Hat's partnership has spanned 20 years, with IBM serving as an early supporter of Linux, collaborating with Red Hat to help develop and grow enterprise-grade Linux and more recently to bring enterprise Kubernetes and hybrid cloud solutions to customers.
These innovations have become core technologies within IBM's $19 billion Hybrid Cloud business. IBM and Red Hat will continue to build and enhance Red Hat partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud, Alibaba and more, in addition to the IBM Cloud.
The Red Hat acquisition by IBM is the third-biggest in the history of US technology.
The biggest acquisition was the $67 billion merger between Dell and EMC in 2016 and JDS Uniphase's $41 billion acquisition of optical-component firm SDL in 2000.
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