After the deal is closed, Red Hat will become part of the corporate division.
IBM announced the purchase of Red Hat, the largest distributor of the Linux operating system and developer of cloud software. The amount of the transaction was approximately $34 billion.
The parties reached a final agreement providing for the purchase by IBM of all Red Hat shares issued at a price of $190 apiece. At the same time, the shares were traded cheaper–at the level of $116. The deal is expected to close in the second half of 2019.
Both sides are linked by 20 years of mutually beneficial cooperation. Red Hat after the closing of the transaction will be transferred to the core division of the corporation. CEO Jim Whitehurst will join the IBM board and will report directly to the chairman of the board of directors and president of IBM, Ginni Rometty.
The purchase has become one of the competitive moves among large software companies to take advantage of the fast-growing cloud computing market. IBM has promised that Red Hat will continue to develop open source services and will not deviate from its own strategy.
The main cloud platforms supplied by Internet companies such as Amazon, Microsoft and Google include proprietary technology that makes it difficult to move from one cloud to another. With Red Hat, the open source leader, IBM is trying to position its cloud offer as a more open alternative.
Red Hat was founded in 1993. The company develops operating systems both for free and by subscription. In 2012, Red Hat became the first open source software provider whose revenue exceeded a billion dollars.