IBM Buys Red Hat for $34 Billion, But Will Keep Company as Separate Unit

IBM announced it is buying Red Hat, a provider of open source cloud software, in a $34-billion acquisition. The result of the acquisition is IBM taking a greater role in the fast-growing hybrid cloud market. The agreement is subject to Red Hat shareholder and regulatory approval, and is expected to close in the latter half of 2019.

Upon closing of the acquisition, Red Hat will become a distinct unit within IBM's Hybrid Cloud organization. Red Hat will continue to be led by its current management team, including CEO Jim Whitehurst, who will also join IBM's senior management team and report to Ginni Rometty. IBM said it intends to maintain Red Hat's headquarters, facilities, brands and practices.

"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," said Whitehurst.

IBM and Red Hat will focus on helping companies create cloud-native business applications faster, drive greater portability and security of data and applications across multiple public and private clouds, drawing on their shared expertise in key technologies such as Linux, containers, Kubernetes, multi-cloud management, and cloud management and automation.

IBM also 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. The companies will also will continue to build and enhance Red Hat partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud, Alibaba and more, in addition to the IBM Cloud. At the same time, Red Hat will benefit from IBM's hybrid cloud and enterprise IT scale in helping expand their open source technology portfolio to businesses globally.

IBM's and Red Hat's partnership has spanned 20 years, with IBM serving as an early supporter of Linux, collaborating with Red Hat to help develop and grow enterprise-grade Linux and more recently to bring enterprise Kubernetes and hybrid cloud solutions to customers. These innovations have become core technologies within IBM's $19 billion hybrid cloud business.

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