34 billion dollars! IBM completes the acquisition of Red Hat and seeks to contribute to cloud computing business

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 34 billion dollars! IBM completes the acquisition of Red Hat and seeks to contribute to cloud computing business


IBM bought Red Hat for $34 billion.

On July 9, local time, US technology giant IBM announced that its $34 billion acquisition of Red Hat was officially completed. This is also a major move IBM is seeking to make to the cloud computing business.

Red Hat and IBM both sell IT solutions to corporate customers. Red Hat is an open source enterprise software manufacturer. IBM is actively involved in various IT solutions, namely enterprise IT software, hardware and services.

The deal was first announced in October 2018, and in May 2019, U.S. regulators approved the deal, agreeing that IBM would buy all of Red Hats shares for $190 a share in cash, equivalent to a 63% premium. On June 27, the European Commission also unconditionally approved IBMs acquisition of Red Hat, arguing that the deal would not cause competition concerns.

After the successful acquisition, Red Hat will become a unit of IBMs hybrid cloud division. Red Hat CEO Jim Whitehurst will join IBMs executive team and report directly to IBM Cognanii Rometty.

IBM and Red Hat will offer the next generation of hybrid cloud platforms based on open source technologies, like Linux and Kubernetes, Reuters reported on July 9.

IBMs cloud strategy has been focused on helping companies connect multiple cloud platforms rather than competing with super-large cloud providers such as Amazon Cloud Services (AWS), Microsoft and Google, Reuters reported.

IBM said Red Hat would continue to build and expand its partnerships, including with major cloud providers such as AWS, Microsoft Azure, Google Cloud and Alibaba.

Since 2013, IBMs cloud revenue as a share of total revenue has increased six times, to 25%. IBMs cloud revenue exceeded $1.9 billion in the 12 months to the first quarter of 2019.

According to CNBC on July 9, cloud computing is one of IBMs four growth engines, and the other three are social, mobile and analytic. IBM now lags behind Amazon and Microsoft in cloud infrastructure business. At present, IBMs revenue has declined year-on-year for three consecutive quarters, but some analysts are hopeful that the acquisition of Red Hat will bring new business to IBM.

In an April report, analysts at Instinet, Nomura Holdingsbrokerage, said: As companies begin to internally deploy key applications to private or public clouds, Red Hats OpenShift products can help IBM win more new customers and jobs. The acquisition of Red Hat is IBMs largest acquisition ever. It is also the third largest M&A transaction in the history of the U.S. technology industry. Not in the AOL era, Warner, the two largest trading activities of the US technology industry were DELLs acquisition of data storage company EMC at a price of $67 billion in 2016. When the Internet bubble burst in 2000, JDSUniphase, a communications equipment company, acquired $41 billion for optical component supplier SDL. Source: Wang Fengzhi _NT2541

In an April report, analysts at Instinet, Nomura Holdingsbrokerage, said: As companies begin to internally deploy key applications to private or public clouds, Red Hats OpenShift products can help IBM win more new customers and jobs.

The acquisition of Red Hat is IBMs largest acquisition ever. It is also the third largest M&A transaction in the history of the U.S. technology industry. Not in the AOL era, Warner, the two largest trading activities of the US technology industry were DELLs acquisition of data storage company EMC at a price of $67 billion in 2016. When the Internet bubble burst in 2000, JDSUniphase, a communications equipment company, acquired $41 billion for optical component supplier SDL.