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IBM Acquires Red Hat

IBM Acquires Red Hat, the leading open source technology company, for $34B

Red Hat is an essential player in the enterprise space, providing open source software operating on Red Hat Enterprise Linux, a big portfolio of open source technology, a popular hybrid cloud platform, and a really healthy developer community. Based in Raleigh, North Carolina, the company employs more than 12,000 people and delights in income of over $2.9 billion. When the acquisition is complete, Red Hat will become a "distinct unit within IBM's Hybrid Cloud team."

IBM consented to pay $190 per share in cash for the company bringing the total value of the acquisition to around $34 billion. According to Reuters, that's a 63 percent premium on the share price as of Friday.

By obtaining Red Hat, IBM believes it gets an advantage over other cloud computing solutions because of the focus on open source. Investing in the cloud is now a given for company, but IBM says lots of companies are hesitant to deploy more services and applications because "the proprietary nature of the cloud market makes it very difficult," especially when multi-cloud environments are being maintained. Red Hat resolves that issue for IBM, providing an already well established open source solution, but now under the banner of IBM's Hybrid Cloud. As for Red Hat, being acquired provides a chance to scale and access to much higher resources.