IBM closes $ 34 billion deal to buy Red Hat - HailNewsUp.com: provides the latest news from India and the world

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Tuesday, July 9, 2019

IBM closes $ 34 billion deal to buy Red Hat

IBM-closes-$-34-billion-deal-to-buy-Red-Hat

International Business Machines Corp. (IBM.N) said on Tuesday it closed its acquisition of software company Red Hat Inc. (RHT.N) for $ 34 billion, with the goal of increasing its cloud computing business.

By highlighting the unit in high-margin businesses, IBM in October agreed to buy Red Hat, the company's largest acquisition in its more than 100-year history.

Ginni Rometty, CEO of IBM since 2012, has led the company towards faster growth segments, such as the cloud, software, and services, and has moved away from traditional hardware products, but not without a full journey of potholes New areas of focus have sometimes disappointed investors.

The company, which obtained approval for the purchase of EU regulators at the end of June and the US regulators. UU In May, it agreed to pay $ 190 per Red Hat share, representing a 63 percent premium.

Founded in 1993, Red Hat specializes in Linux operating systems, the most popular type of open source software and an alternative to the proprietary software created by Microsoft Corp (MSFT.O). IBM has faced years of declining revenue as it moves from its legacy computer hardware business to new technology products and services.

Red Hat CEO Jim Whitehurst and his management team will remain in place. Whitehurst will join IBM's senior management team and inform Rometty.

IBM will maintain Red Hat's headquarters in Raleigh, North Carolina, its facilities, brands, and practices, and said it operates as a separate unit within IBM.

The companies said IBM and Red Hat will offer "a next-generation hybrid multi-cloud platform" that will be "based on open source technologies, such as Linux and Kubernetes."

IBM's cloud strategy has focused on helping companies join multiple cloud platforms instead of competing for head-on with "hyperscale" cloud providers, such as Amazon Web Services, a unit of Amazon.com Inc. ( AMZN.O), Microsoft and Google Alphabet Inc. GOOGL.O).

IBM said Red Hat will continue to "build and expand its partnerships, including those with leading cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud, and Alibaba."

Since 2013, revenues from the IBM cloud as a percentage of total revenues have been multiplied by six to 25 percent. In the 12 months to the first quarter of 2019, the revenues of the cloud exceeded $ 19 billion.

Red Hat is expected to contribute approximately two compound annual revenue growth points over a five-year period, IBM said.