The deal comes on the heels of similar open source related deals such as
Microsoft’s $7.5 billion purchase of GitHub, Salesforce’s $6.5 billion acquisition of MuleSoft and big-data rivals Cloudera and Hortonworks agreed to merge in a $5.2 billion deal.
The acquisition is the third largest tech acqusition of its kind, the third largest in US Tech history and the largest acquisition deal from IBM.
The will see Red Hat become a unit of IBM’s Hybrid Cloud division, with Red Hat CEO Jim Whitehurst joining IBM’s senior management team and reporting to CEO Ginni Rometty.
“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,”said Ginni Rometty, the CEO of IBM in her statement.
Red Hat is the distributor of an open source Linux variant used to manage servers in data centers. The Company went public during the
Earning $259 million on revenue of $2.92 billion in its last fiscal year, which ended Feb. 28. Red Hats revenue grew 21% between the 2017 and 2018 fiscal years.
The deal means IBM will pay cash to buy all shares in Red Hat at $190 each.
Red Hat will be a distinct unit within IBM’s Hybrid Cloud team — which is already a $19 billion business for IBM, the company said — and it will continue to focus on open-source software.
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