IBM takes over 34 billion U.S. dollars Red Hat

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IBM has reached an agreement to acquire Red Hat to strengthen its position in the cloud market. Big Blue pays about 34 billion dollars for the software company, which is equivalent to almost 30 billion euros. This makes it the largest IBM acquisition ever.

Ginni Rometty, CEO of IBM, is focusing on the additional cloud benefits when announcing the deal. According to Rometty, it heralds a total change in the cloud market, with IBM being “the world’s number one hybrid cloud provider”. She also talks about an open cloud solution that allows companies to get the most out of their business activities. Undoubtedly, she then refers to Red Hat’s open-source solutions.

IBM is searching

IBM states that companies currently deploy only 20 percent of the cloud. They use computer power to save costs. The remaining 80 percent is about “unlocking real business value and driving growth”. This means moving business applications to the hybrid cloud, using more data and optimising each business unit.

Although the deal is remarkable, it doesn’t come out of nowhere. Earlier there were rumors that large tech companies were interested in Red Hat, although those rumors were for 2010. In addition to IBM, Oracle and Microsoft were also mentioned at the time. Moreover, in previous years IBM had to contend with contraction and its cloud providers such as AWS and Azure were better positioned. The company therefore needs to find a way to turn the tide, in which Red Hat, with its rising revenues, can help.

What’s next?

Yet not everyone is happy with the deal. A Red Hat employee says he can’t imagine a greater culture shock from ZDnet. “I’m looking for a job at an open-source company,” says another employee. In addition, employees would prefer a takeover by Microsoft, suggests a source of ZDnet.

The completion of the acquisition is still pending. As usual with a big deal, investors and authorities still have to give their final approval.

This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.