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IBM acquires cloud provider Red Hat in deal worth US$34 billion

October 29, 2018  

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IBM Corp. and Red Hat announced today that the companies have reached a definitive agreement under which IBM will acquire all of the issued and outstanding common shares of Red Hat for US$190 per share in cash, representing a total enterprise value of approximately US$34 billion.

“The acquisition of Red Hat is a game-changer,” said Ginni Rometty, IBM chairman, president and CEO. “It changes everything about the cloud market. IBM will become the world’s number one hybrid cloud provider.

“Most companies today are only 20% along their cloud journey, renting compute power to cut costs,” she said. “The next 80% 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 optimizing every part of the business, from supply chains to sales.”

Jim Whitehurst, Red Hat’s president and CEO said joining forces with IBM will “provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience.”

The two companies said in a release that research “reveals that upwards of 80% of business workloads have yet to move to the cloud, held back by the proprietary nature of today’s cloud market. This prevents portability of data and applications across multiple clouds, data security in a multi-cloud environment and consistent cloud management.”

Upon closing of the acquisition, Red Hat will join IBM’s Hybrid Cloud team as a distinct unit, preserving the independence and neutrality of Red Hat’s open source development heritage and commitment, current product portfolio and go-to-market strategy, and unique development culture. Red Hat will continue to be led by Whitehurst and Red Hat’s current management team.  Whitehurst also will join IBM’s senior management team and report to Rometty.

Subject to regulatory approvals and other customary closing conditions, the deal is expected to close in the latter half of 2019.

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