IBM and Red Hat executives announced Monday (29/10/2018) that IBM is acquiring the open source software and cloud services company in a $34 billion cash deal.
“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, IBM Chairman, President and Chief Executive Officer. “IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.
The acquisition is by far IBM’s largest deal ever, and the third-biggest in the history of U.S. tech. Excluding the AOL-Time Warner merger, the only larger deals were the $67 billion merger between Dell and EMC in 2016 and JDS Uniphase’s $41 billion acquisition of optical-component supplier SDL in 2000, just as the dot-com bubble was bursting.
Open source has been the biggest theme in technology this year. Prior to IBM’s purchase of Red Hat, two of the biggest tech deals of the year were Microsoft’s $7.5 billion purchase of GitHub, a code-sharing service, and Salesforce’s $6.5 billion acquisition of MuleSoft, whose technology stitches together disparate software applications, data and devices. Earlier this month, big-data rivals Cloudera and Hortonworks agreed to merge in a $5.2 billion deal.
About Red Hat, Inc.
Red Hat is the world’s leading provider of enterprise open source software solutions, using a community-powered approach to deliver reliable and high-performing Linux, hybrid cloud, container, and Kubernetes technologies. Red Hat helps customers integrate new and existing IT applications, develop cloud-native applications, standardize on our industry-leading operating system, and automate, secure, and manage complex environments. Award-winning support, training, and consulting services make Red Hat a trusted adviser to the Fortune 500. As a strategic partner to cloud providers, system integrators, application vendors, customers, and open source communities, Red Hat can help organizations prepare for the digital future.
Why IBM bought Red Hat –
- IBM’s and Red Hat’s partnership has spanned 20 years, with IBM serving as an early supporter of Linux, collaborating with Red Hat to help develop and grow enterprise-grade Linux and more recently to bring enterprise Kubernetes and hybrid cloud solutions to customers. These innovations have become core technologies within IBM’s $19 billion hybrid cloud business. Between them, IBM and Red Hat have contributed more to the open source community than any other organization.
- The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, IBM Chairman, President and Chief Executive Officer. “IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.
- What IBM didn’t have, until now, was the expertise to build a top-notch hybrid cloud. As IBM CEO Ginni Rometty said on a Monday morning conference call the number one thing customers were telling IBM is that they want to move their corporate data “across multiple cloud environments with no lock-in.” Together, “that’s what the two of us will do.”
- Because Red Hat, besides knowing Linux like the back of its hand, has an excellent Kubernetes distribution in OpenShift. And, this is important, Red Hat has numerous great open-source developers. That’s vital because to make Kubernetes a much better fit with hybrid clouds, Kubernetes Federation needs to be perfected — and it’s a long way from there still.
- “Open source is the default choice for modern IT solutions, and I’m incredibly proud of the role Red Hat has played in making that a reality in the enterprise,” said Jim Whitehurst, President and CEO, Red Hat. “Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience – all while preserving our unique culture and unwavering commitment to open source innovation.”
Red Hat will remain a standalone business unit within IBM, and an IBM spokesperson said that IBM “will remain committed to Red Hat’s open source ethos, its developer community and its open source community relationships.” Red Hat will maintain its current leadership team and remain in its current headquarters and facilities. The culture will remain as well—though it’s possible IBM and Red Hat may cross-pollinate a bit more than they have in the past.