IBM and Red Hat announced Sunday evening that IBM is buying Red Hat for $34 billion. The world’s cloud landscape is now totally changed, and IBM will now be the biggest cloud and hybrid provider in the world!
Red Hat is the world’s largest open source cloud software provider. Sunday evening they sent out a press release stating that IBM is buying Red Hat for $190 pr share, which in total will be $34 billion.
The main points of the deal are:
- IBM and Red Hat to provide open approach to cloud, featuring unprecedented security and portability across multiple clouds
- Deal accelerates IBM’s high-value business model, making IBM the #1 hybrid cloud provider in an emerging $1 trillion growth market
- Acquisition will be free cash flow and gross margin accretive within 12 months, accelerate revenue growth and support a solid and growing dividend
- IBM to maintain Red Hat’s open source innovation legacy, scaling its vast technology portfolio and empowering its widespread developer community
- Red Hat to operate as a distinct unit within IBM’s Hybrid Cloud team (not unlike Lotus was its own team within IBM for many years)
This acquisition makes IBM the world’s largest cloud and hybrid provider. This is something IBM sorely needs, since their own cloud strategy has made them lag behind cloud providers like Microsoft, Amazon and Google.