IBM Corp. is acquiring open-source cloud computing company Red Hat for $190 per share in cash, valuing the deal at about $34 billion. The premium appears significant as the deal is for about 10x sales. Red Hat shares traded as high as $175 in June but hovered around $116 before the deal was announced on Oct. 28.
In a press release, Big Blue stated that IBM and Red Hat will also continue to build and enhance Red Hat partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud, Alibaba and more, in addition to the IBM cloud.
Red Hat will be a part of IBM’s hybrid cloud business while remaining a distinct unit with its current headquarters and management team. Jim Whitehurst, who will remain at the helm of Red Hat, will also join IBM’s senior management team, reporting to Ginni Rometty.
The acquisition is expected to close in the second half of 2019.
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- Ginni Rometty
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- Jim Whitehurst
