Wednesday, 21 August, 2019

IBM Closes Red Hat Acquisition Pledging to Keep Enterprise Software Separate

The Company IBM's Buying For 34 Billion Dollars IBM closes $34-billion Red Hat acquisition
Ginger Lawrence | 10 July, 2019, 20:31

Global tech major IBM has finished the acquisition process of Red Hat Inc, the maker of a popular Linux operating system, in a whopping $34-billion deal.

Touted to be IBM's largest acquisition so far, the buyout of the enterprise software maker is apparently speculated to be one of the biggest deals in the US tech history and the second-largest technology deal worldwide.

Red Hat's headquarters, facilities, brands, practices, and leadership team will remain the same under IBM's wing, with Whitehurst set to join IBM's senior management team in addition to his role at Red Hat. Whitehurst said that under IBM, Red Hat will have the scale to make open source technology an enterprise standard.

Red Hat CEO Jim Whitehurst and his management team will remain in place.

But IBM CEO Ginni Rometty is going all-in on a hybrid cloud - combining plain cloud computing - i.e., putting all your data on somebody else's servers - and keeping some what's essential to the business in-house.

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With IBM's acquisition of Red Hat now formally completed, both companies are working to reassure customers and channel partners that the new arrangement will be good for technology-hungry enterprises and for the MSPs, VARs, resellers and others that help them build and manage their IT systems.

IBM has announced that it has closed the acquisition of Red Hat for around US$34bn, noting in its press release that it expects the deal to add two points to its compound annual growth rate (CAGR) over the next five years.

IBM cloud revenue for the 12-month period through the first quarter of this year grew to over $19 billion.

"With the acquisition of Red Hat, and IBM's commitment to Red Hat's independence, IBM is well positioned to help enterprises differentiate themselves in their industry by capitalising on open source in this emerging hybrid and multi-cloud world". The Red Hat acquisition is created to reverse that trend. IBM will offer the first hybrid multi-cloud platform, providing the glue to connect various clouds together.

"IBM has been championing and contributing to open source for many decades", Krishna said. "Many of the clients. actually use both, which means it's not really an overlap it's different use cases. We believe that hybrid cloud unlocks tremendous value and is the only way forward for our clients". Red Hat also will continue to build and expand its partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba. But some analysts are hopeful about the Red Hat deal's opportunity to bring in new business.