IBM’s $34B Bid For Red Hat Subject To EU Regulator’s Approval

IBM has bid $34 billion for the software company Red Hat, but the deal is subject to approval by EU antitrust regulators, according to a report by Reuters.

The antitrust body will make the decision by June 27. The U.S. regulatory body already cleared the deal earlier this month without concessions.

The deal, which would be IBM’s biggest, is intended to help the company expand its footprint into subscription-based software. On Tuesday (May 21), IBM said it asked for approval the day before. The European Commission confirmed this was the case.

Launched in 1993, Red Hat specializes in Linux operating systems, which is an open-source software, different from Microsoft Corporation’s proprietary software.

The Commission can choose to clear the deal with conditions, clear it without conditions or open an investigation.

IBM has recently been embracing new technologies. On its Q1 earnings call, blockchain and artificial intelligence were repeatedly discussed.

In terms of headline numbers, adjusted earnings per share came in at $2.25, beating expectations by three pennies.

Revenues missed expectations at $18.2 billion; the Street had been looking for $18.5 billion. The latest top-line tally marked a 5 percent decline from a year ago, and continued the reconfiguring of certain business lines and outright sales of other units.

By way of example, during the quarter, the tech giant sold its mortgage servicing business to Mr. Cooper Group. And in the latest quarter, IBM changed the way it reports results – what was once the Technology Services & Cloud Platforms segment is now the Cloud & Cognitive Software and Global Technology Services segment.

The Global Technology Services segment – tied to tech infrastructure and support of that infrastructure – saw revenues of $6.9 billion, down 7 percent.

Business services were $4.1 billion, roughly flat. Systems sales slipped 11 percent as demand declined for mainframes and other hardware, and demand seemed soft in emerging markets. CFO James Kavanaugh pointed to the Asia Pacific (AP) region, which saw revenue deceleration.