IBM to acquire Red Hat for record-breaking $34bn

US tech giant makes its largest ever acquisition and third largest purchase in US tech history, marking the latest of IBM's "strategic imperatives"


IBM will acquire Red Hat for $34bn in what will become the legacy technology colossus's largest acquisition ever.

For 25 years, Red Hat has been a major distributor of open-source software and technology. Its partnership with IBM has spanned two decades, with IBM being an early supporter of Red Hat Enterprise Linux, Red Hat's popular open-source operating system.

"The acquisition of Red Hat is a game-changer. It changes everything about the cloud market," said IBM chairman, president and CEO Ginni Rometty. "IBM will become the world's number one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses."

According to a joint statement from both companies, IBM will buy all shares in Red Hat for $190 each. Shares in Red Hat had previously closed at $116.68 the Friday before the deal was announced.

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Not only will the acquisition be IBM's largest ever, it will be the third biggest buyout in the history of US technology, beaten only by the $67bn merger between Dell and EMC in 2016 and JDS Uniphase's $41bn acquisition of SDL in 2000.

The move marks the latest in a number of "strategic imperatives" IBM has been making of late; as well as investing in cloud technology, IBM has been making forays into blockchain and AI in an attempt to spur growth. Last month alone it announced a new blockchain payment network, launched an AI toolkit to avoid bias and invested in a new multicloud service to stream workflow.

A couple of weeks ago it was revealed that IBM has lost 12% of its value this year, leading IBM CFO Jim Kavanaugh to state that the business's financial standing was expected to improve in 4Q18.

"We've got a chance to exit the year with a very strong position in our services base of business," Kavanaugh said, adding that the losses so far this year were due to IBM "wrapping up our most successful mainframe product ever".

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