IBM acquires Red Hat for $34 billion

IBM and Red Hat have reached an agreement on an acquisition. It is the largest acquisition ever for IBM. A total amount of $34 billion is involved, converted to EUR 29.8 billion.

The acquisition will make IBM the largest provider of ‘hybrid cloud’ services, i.e. the combination of private cloud services, where Red Hat plays a role, and public cloud services, such as IBM Cloud. According to IBM, companies have only partially switched to cloud services and there is still a lot of potential to shift the rest to such services, ‘from the supply chain to sales’. IBM expects that hybrid services in particular will grow, whereby companies will not become completely dependent on a large cloud platform.

IBM promises that Red Hat will continue on its current course, with contributions to the open source community and its relationship with developers. Red Hat will also continue to serve its current customers, including Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba.

Red Hat hopes to accelerate growth as part of IBM’s Hybrid Cloud division. Red Hat was founded in 1993 as a provider of Linux and Unix services and a year later the first Red Hat distribution appeared. In 2012, Red Hat became the first open source company to achieve annual sales of more than $1 billion. Red Hat now has 12,600 employees.

IBM has supported Linux for its servers and mainframes since 1998. The company set up the Linux Technology Center and invested more than $1 billion in the software, including optimizing Linux for the PowerPC architecture. In addition, the company is active in other open source areas. For example, IBM is developing a blockchain service based on The Linux Foundation’s Hyperledger project.

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