International Business Machines (IBM) has closed the purchase of Red Hat for $34bn in cash. The agreement was announced last October after the acquisition of GitHub by Microsoft, and it is the largest acquisition made by IBM in its history. IMB company did not expect to close the agreement until one year later, but they have managed to bring it forward. The agreement involves a payment of $190 in cash for each Red Hat share.
This alliance aims to turn IMB into the largest service provider of “Hybrid Cloud”, the name given to the services that allow the joint use of private servers and large public servers.
The agreement´s background
According to Bloomberg, the “Big Blue” (IBM) has suffered a sharp drop in revenues in six of the last seven years, so the company is looking for this pact to boost their strategy of developing the Hybrid Cloud to avoid falling into the irrelevance of the market.
The company led by G. Rometty has already seen itself in similar situations in its more than 100 years of history. In the 1990s, Lou Gerstner, Rometty’s predecessor, was recognized as the savior of IBM. At that time the company was on the verge of bankruptcy, but Gerstner and his management team decided to ally with software developers to improve the functioning of their devices.
On the other hand,Red Hat is one of the leading companies in the development of open source, although its shares show a negative trend in recent times. The possibility that other large companies such as Microsoft or Amazon target this market poses a great threat.
As reported by Bloomberg, Rometty said that “This market (Hybrid Cloud) is a trillion dollars, it is emerging and I find it very interesting that since we announced the agreement everyone talks about it”, to which she added that the hybrid cloud was the future of cloud services.
IBM has stated that its intention is to maintain the independent functioning of Red Hat. Offering an independent hybrid cloud service, providing this service to their customers regardless of the cloud provider they use, as, for example, Amazon Web Services or Microsoft´s Azure.
Red Hat will maintain its current headquarters in Raleigh, North Carolina, as well as its CEO, Jim Whitehurst, and its current management team. In addition, Whitehurst will join IBM´s mnagement team.