Embracing the Hybrid Cloud Future, IBM Closes Acquisition of Red Hat for $34 Billion

Calling it a landmark acquisition, IBM and Red Hat announced today that they have closed the transaction under which IBM acquired all of the issued and outstanding common shares of Red Hat for $190 per share in cash, representing a total equity value of approximately $34 billion.

Together, IBM and Red Hat say they will offer a next-generation hybrid multi-cloud platform. Based on open source technologies, such as Linux and Kubernetes, the platform will allow businesses to securely deploy, run and manage data and applications on-premise and on private and multiple public clouds.

According to IBM, this not only positions IBM as the leading hybrid cloud provider, but also signals a new era as hybrid cloud adoption rates soar. With Red Hat, IBM has acquired one of the most important software companies in the IT industry, IBM said, noting that Red Hat’s pioneering business model helped bring open source—including technologies such as Linux, Kubernetes, Ansible, Java, Ceph and others—into the mainstream for enterprises.

Citing industry data, IBM said most enterprises today are approximately 20% into their transition to the cloud. While the first chapter of a cloud journey is about making reducing costs, boosting productivity, and revitalizing customer-facing innovation programs,  chapter two, however, is about shifting mission-critical workloads to the cloud and optimizing everything from supply chains to core banking systems.

To succeed in this next chapter of the cloud, IBM says, businesses need to manage their entire IT infrastructure, on and off-premise and across different clouds, including private and public, in a  consistent, integrated manner.  

"Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors," said Ginni Rometty, IBM chairman, president and CEO, in making the announcement "They need open, flexible technology to manage these hybrid multi-cloud environments. And they need partners they can trust to manage and secure these systems. IBM and Red Hat are uniquely suited to meet these needs. As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come."

IBM said that Red Hat will continue to be led by Jim Whitehurst and its current management team. Whitehurst is joining IBM's senior management team, reporting to Ginni Rometty. IBM also said it will maintain Red Hat's headquarters in Raleigh, North Carolina, its facilities, brands, and practices. Red Hat will operate as a distinct unit within IBM and will be reported as part of IBM's Cloud and Cognitive Software segment.

Looking ahead, IBM said, clients will begin benefiting from the companies' offerings before the end of the summer, and together will introduce a next-generation hybrid multicloud platform to help clients innovate anywhere. Central to the platform is an infrastructure-independent common operating environment that runs anywhere—from any data center to multiple clouds to the edge.  Based on open source technologies, such as Linux and Kubernetes, IBM said,the platform will give businesses the freedom to securely deploy, run, and manage data and applications anywhere they require. 

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