IBM Closes On Red Hat Acquisition

As it looks to bolster its cloud computing business, International Business Machines Corp. (IBM) has closed its $34 billion acquisition of Red Hat Inc. IBM had agreed to purchase the software company in October, which marks the largest acquisition in the company’s history of over 100 years, Reuters reported.

Jim Whitehurst, the CEO of Red Hat, along with his management team, will reportedly stay in place. Whitehurst will also become part of the senior management team at IBM and will report to Ginni Rometty. It was also noted that IBM will keep Red Hat’s Raleigh, North Carolina headquarters along with its brands, facilities and practices. The company will operate as a distinct IBM unit.

The firms noted that IBM, along with Red Hat, will provide “a next-generation hybrid multi-cloud platform” that is to be “based on open source technologies, such as Linux and Kubernetes.”

Red Hat, which launched in 1993, specializes in Linux operating systems, an alternative to Microsoft Corp.’s proprietary software.

IBM noted that Red Hat will still “build and expand its partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba.” It was also reported that IBM’s cloud revenue as a percentage of total revenue has expanded “six-fold” since 2013, to 25 percent. In addition, cloud revenue surpassed $19 billion in the 12 months through Q1 2019.

The report comes as news surfaced in late June that Brussels had reportedly approved the $34 billion takeover of Red Hat by IBM, after European Union antitrust officials had mulled concerns over the move. The Commission found that the arrangement, which was agreed to last year, “would raise no competition concerns.” In fact, it “took note” that the deal could, in fact, stir up competition. The companies hope the arrangement will accelerate the move to the cloud for corporate clients, while providing a boost to Big Blue’s revenues.