IBM buys software company Red Hat for $34bn: statement

IBM is reportedly nearing a deal to acquire Red Hat, the software company valued at $20 billion

Revenue at Red Hat, which sells software and services based on the open source Linux operating system, is expected to top $3 billion for the first time this year as the company's Red Hat Enterprise Linux product attracts business from large customers.

In announcing the deal, Red Hat claimed its own research shows four out five business workloads have yet to make it to the cloud.

IBM will pay $190 per Red Hat share in cash. Presumably the acquisition will have to jump various regulatory hurdles before it is set in stone.

"The acquisition of Red Hat is a game-changer", IBM chairman Ginni Rometty said in a prepared statement. "IBM will become the world's No. 1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses".

The Center for Media Justice launched an online petition previous year to stop IBM from developing cloud resources that would use facial recognition technology to identify undocumented immigrants so that they can be detained, denied visas and deported from the United States.

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"It changes everything about the cloud market", she said.

IBM says it intends to keep Red Hat's headquarters in Raleigh. I'm sure I am not alone is fearing that IBM could ultimately ruin Red Hat and its offerings. Red Hat's current management team, led by president and CEO Jim Whitehurst, will remain in place. That's a 63 percent premium over Red Hat's closing price of $116.68 per share on Friday.

Anticipating concerns that the acquisition would endanger Red Hat's appeal as an agnostic provider of open-source software, IBM said it will "remain committed to Red Hat's open governance, open source contributions, participation in the open source community and development model, and fostering its widespread developer ecosystem". With that said, IBM has always been an open source proponent, so maybe it will work out well.

IBM and Red Hat will be strongly positioned to address this issue and accelerate hybrid multi-cloud adoption. Between them, IBM and Red Hat have contributed more to the open source community than any other organisation.

On its part, IBM said it is committed to Red Hat's role as an open source contributor. It took its name after a merger with another company, Red Hat Linux.

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