IBM to buy Red Hat for $34B

On Sunday, IBM  announced it would pay a $34 billion in cash and debt to acquire enterprise open source provider Red Hat.

Eclipsing Microsoft’s $26.2 billion acquisition of LinkedIn, this is the biggest software acquisition in history.

Red Hat, which specialized in the Linux operating system, charges customers for support, training and consulting services.

The acquisition — IBM’s largest ever — highlights the company’s efforts to increase subscription-based software offerings as demand for mainframe servers and software declines.

IBM hopes the acquisition will help it expand its position in the enterprise cloud computing market to better compete with the likes of Amazon, Google and Microsoft.

“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, IBM Chairman, President and Chief Executive Officer, in a statement. “IBM will become the world’s number-one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

IBM said the deal has already been approved by the boards of directors of both IBM and Red Hat but is still subject to Red Hat shareholder and regulatory approvals. If all goes as planned, the acquisition is expected to close in the latter half of 2019.

IBM will pay $190 per share in cash for Red Hat, a 62 percent premium over Friday’s closing share price. The deal is expected to close in the second half of 2019.

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