Red Hat is Finally IBM’s Subsidiary After Closing the World’s Second Biggest IT Deal
The much-rumoured deal has finally come to a conclusion, as IBM has finally acquired Red Hat for a sum of $34 billion. The rumours of the acquisition had been making rounds for the past couple of months, and now, with Red Hat, IBM will be moving forward to extend its expertise in cloud computing. The company paid $190 a share for all the Red Hat’s issued and outstanding shares in cash, completely overtaking all the operations of the company.
Since the past few years, the cloud has become the biggest thing, and IBM has been trying its hands in the field but had been falling against other cloud service providers like Amazon and Microsoft. Through the deal with Red Hat, the company will be now working as one of the partners in both Amazon’s AWS and Microsoft’s Azure. Together the companies will be experimenting on the hybrid cloud computing.
As the name suggests, the hybrid cloud technology will allow the companies to run their programs over their own servers as well as on the public servers, simultaneously. In this case, AWS and Azure will be the public clouds, and IBM will be closely working with its rivals.
On the acquisition of Red Hat Ginni Rometty, IBM CEO, said, “This is about hybrid cloud. It is the future, it is the destination of the cloud. This market is a trillion dollars. It’s emerging, and it’s very interesting to me that since our announcement, now you hear everybody else talking about it too.”
This agreement between IBM and Red Hat not only will make the rival companies work together, but the deal is the one largest tech acquisitions of all time.
The company revealed its interest in buying the Red Hat last October and obtained the stamp of approval from the U.S. Department of Justice in May this year. And, finally, after getting the unconditional approval from the EU, IBM purchased the company.
The acquisition of Red Hat is a positive sign for IBM moving towards stabilization, as it has been facing some much losses for the past six years. And with taking over the company, and its work in cloud computing, there are high chances for IBM to get through the losses it has faced in the past.
According to IBM, Jim Whitehurst, CEO Red Hat, will continue to head the company and will be joining the senior management of IBM. Whitehurst will be working under IBM CEO Rometty and will directly report her. Despite the acquisition, the company will be operating independently.
“We think open source has become the de-facto standard in technology because it enables these solutions. Joining forces with IBM gives the company the opportunity to bring more open source innovation to an even broader range of organizations,” said Jim Whitehurst, “You’ve heard me say this before, but it bears repeating, Red Hat is still Red Hat. IBM is committed to preserving Red Hat’s independence, neutrality, culture and industry partnerships”, he added.
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