IBM to Acquire Red Hat for $34 Billion

Posted on October 28, 2018 by Paul Thurrott in Cloud with 27 Comments

IBM announced today that it will acquire open source firm Red Hat for approximately $34 billion in cash and debt.

“The acquisition of Red Hat is a game-changer,” IBM chairman Ginni Rometty said in a prepared statement. “IBM will become the world’s number one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

That will come as news to Microsoft, which is, in fact, the world’s number one hybrid cloud provider. But according to IBM, the combined assets of both firms will bring a major boost to “open source as the basis for digital transformation,” using technologies such as Linux, containers, Kubernetes, multi-cloud management, and cloud management and automation.

IBM and Red Hat have been partnering on enterprise-grade Linux for over 20 years, and the firms describe this acquisition as an evolution of that strategy.

“Powered by IBM, we can dramatically scale and accelerate what we are doing today,” Red Hat president and CEO Jim Whitehurst wrote in an email to employees today. “Together we can become the leading hybrid cloud solutions provider.”

Finally, the firms say that Red Hat will remain independent.

“Red Hat is still Red Hat,” Whitehurst continues. “When the transaction closes, we will be a distinct unit within IBM and I will report directly to Ginni [Rometty]. Our unwavering commitment to open source innovation remains unchanged.”

The acquisition is subject to regulatory approval and to Red Hat shareholder approval. But it is expected to close by the second half of 2019.


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