IBM buying North Carolina-based Red Hat in $34B deal

IBM buying North Carolina-based Red Hat in $34B deal

The company focuses on a type of open-source software called Linux, an operating system that was created by Finnish programmer Linus Torvalds.

The Raleigh, North Carolina based company is today present in 35 countries and employs some 12,000 people, and is one of the best-known open-source players whose customers pay for tailor-made solutions.

Yes, plenty of the VMs running under vSphere on the IBM cloud will use Red Hat, and lots of IT titans offer overlapping and/or competing products.

But the company has struggled a bit lately. They're down from about $175 in June to under $117 on Friday.

IBM shares closed on October 26 at $124.79, just off the 52-week low of $123.71. As Bloomberg reports, revenue at Red Hat is expected to top $3 billion this year, but its sales missed analyst expectations last quarter.

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IBM has seen revenue decline by nearly a quarter since Rometty, 61, took the CEO role in 2012.

IBM said that both companies will continue to build partnerships with multiple cloud providers, including AWS, Microsoft's Azure, Google Cloud, Alibaba, and others, in addition to IBM Cloud. Yet IBM and VMware are partners, with vSphere-powered clouds being one of IBM's bigger cloud successes.

"The acquisition of Red Hat is a game-changer", IBM CEO Ginni Rometty said in a press release. "We believe the significance and timing of this cloud deal is noteworthy as IBM has finally decided now is the time to make its poker move".

S&P downgraded International Business Machines (IBM) on Monday to A from A+, following the announced US$34bn acquisition of open source software solutions provider Red Hat. "The next 80 percent is about unlocking real business value and driving growth", she said. This is the next chapter of the Cloud.

Red Hat now has more than 95 offices worldwide, including major software-engineering groups in San Francisco and Boston and a public-policy operation in Tyson's Corner, Va., near the nation's capital.

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IBM to acquire Red Hat for $34 billion.

"IBM has a chance to strengthen on premise assets and offerings", said Holger Mueller, principal analyst at Constellation Research Inc. But that is a shrinking business. "These are new products for IBM to sell".

While it might be all good on the business side of things, such acquisitions do make open source advocates worry, especially users of the Fedora Linux distribution that's based on and supported by Red Hat.

"Our unwavering commitment to open source innovation remains unchanged".

IBM has confirmed it is buying software firm Red Hat for $34 billion. IBM will purchase all shares of Red Hat for $190 each, a 63% premium over the company's current valuation. It's well-known for trying to integrate acquisitions into its huge organization, a process known internally as "blue-washing".

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Whitehurst also stressed that "Red Hat is still Red Hat".

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