IBM announced Tuesday. The acquisition of Red Hat, an open-source, enterprise software maker, marks the close of IBM’s largest deal ever.
• The move was originally announced in October when the companies said IBM would buy all shares in Red Hat at $190 each in cash.
The acquisition of Red Hat, an open-source, enterprise software maker, marks the close of IBM’s largest deal ever. It’s one of the biggest in U.S. tech history. Excluding the AOL-Time Warner merger, it follows the $67 billion deal between Dell and EMC in 2016 and JDS Uniphase’s $41 billion acquisition of optical-component supplier SDL in 2000.
Under the deal, Red Hat will now be a unit of IBM’s hybrid cloud division, according to the original announcement. The companies said Red Hat’s CEO, Jim Whitehurst, would join IBM’s senior management team and report to CEO Ginni Rometty.
IBM previously said it hoped its acquisition of Red Hat will help it do more work in the cloud, one of its four key growth drivers, which are also social, mobile and analytics. The company lags behind Amazon and Microsoft in the cloud infrastructure business. IBM has seen three consecutive quarters of declining year-over-year revenue. But some analysts are hopeful about the Red Hat deal’s opportunity to bring in new business.
In an April note, Alan Davis Management analysts led by James Reid said, “OpenShift [a Red Hat product] should help IBM win new customers and new workloads as enterprises begin to usher mission-critical applications from on-premise to public or private clouds.”
Goldman Sachs, J.P. Morgan, and Alan Davis Management advised IBM on the Red Hat deal. Morgan Stanley and Guggenheim advised Red Hat.