IBM to gobble Red Hat for $34bn - yes, the enterprise Linux biz

IBM to acquire Red Hat for $34 billion.                  Gabriel Bouys  AFP  Getty Images

IBM to acquire Red Hat for $34 billion. Gabriel Bouys AFP Getty Images

Revenue at Red Hat, which sells software and services based on the open source Linux operating system, is expected to top $3 billion for the first time this year as the company's Red Hat Enterprise Linux product attracts business from large customers.

A few minutes ago, we announced that Red Hat has signed an agreement to combine forces with IBM in the largest software company acquisition to date.

Finally, the firms say that Red Hat will remain independent.

IBM CEO Ginni Rometty focused on the cloud benefits of IBM acquiring Red Hat rather than Linux.

The market hasn't loved Red Hat recently.

Still, the premium IBM is paying for the open-source icon indicates it's serious about making a bigger play for the cloud.

Rometty continued,"Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs". It changes everything about the cloud market.

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We have barely scratched the surface of the opportunity that is ahead of us. Will it be a positive for the open source and Linux communities? This a total enterprise value of approximately $34 billion. Imagine Red Hat with the ability to invest even more and faster to accelerate open source innovation in emerging areas. "IBM will become the world's #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses".

IBM and Red Hat are no strangers, having been partners for two decades. Since the day we made a decision to bring open source to the enterprise, our mission has remained unchanged.

"In addition, IBM and Red Hat will remain committed to the continued freedom of open source, via such efforts as Patent Promise, GPL Cooperation Commitment, the Open Invention Network and the LOT Network", the two companies said.

Under the deal, IBM will acquire all of the issued and outstanding common shares of Red Hat for $190 per share in cash.

They also pledged that they'll continue partnerships with AWS, Microsoft's Azure cloud, Google LLC's cloud, Alibaba Holdings Ltd. and others.

I'd be remiss if I ended this email without saying thank you.

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