IBM has agreed to acquire open-source software company Red Hat for $34 billion, the company announced Sunday.
IBM hopes the acquisition will help it expand its position in the enterprise cloud computing market to better compete with the likes of Amazon, Google and Microsoft. Red Hat, which specialized in the Linux operating system, charges customers for support, training and consulting services.
The acquisition — IBM’s largest ever – highlights the company’s efforts to increase subscription-based software offerings as demand for mainframe servers and software declines.
“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” IBM CEO Ginni Rometty said in a statement. “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 Raleigh, N.C.-based software company will operate as a distinct unit within IBM’s Hybrid Cloud team.
IBM will pay $190 per share in cash for Red Hat, a 62 percent premium over Friday’s closing share price. The deal is expected to close in the second half of 2019.
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