IBM wraps up acquisition of open source cloud software provider Red Hat

IBM acquisition of Red Hat : US IT giant IBM has completed its previously announced $34 billion acquisition of North Carolina based open source cloud software provider Red Hat.

Under the terms of the deal announced in October 2018, IBM acquired all the shares of Red Hat for $190 in cash.

IBM acquisition of Red Hat is said to combine two leading hybrid cloud providers and will help companies to move all business applications securely to the cloud.

The two companies are now expected to accelerate innovation by providing a next-generation hybrid multicloud platform. Based on Linux and Kubernetes, and other open source technologies, the platform will enable businesses to deploy, run and manage data and applications securely on-premises and on private and various public clouds.

IBM acquisition of Red Hat. Photo courtesy of PRNewsfoto/IBM.

Commenting on IBM acquisition of Red Hat, Ginni Rometty – IBM chairman, president and CEO, said: “Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors,” said Ginni Rometty, IBM chairman, president and CEO.

“They need open, flexible technology to manage these hybrid multicloud environments. And they need partners they can trust to manage and secure these systems. IBM and Red Hat are uniquely suited to meet these needs. As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come.”

The fiscal year 2019 revenue of Red Hat was $3.4 billion, which has surged 15% year-over-year. Its fiscal Q1 2020 revenue, reported in June, was $934 million, an increase by 15% year-over-year.

During Q1 2020, the subscription revenue of the open source cloud software provider moved up 15 % year-over-year, which included earnings from application development-related and other emerging technology solutions. On the other hand, the services revenue of Red Hat increased by 17%.

The open source cloud software provider will continue to be headed by Jim Whitehurst and its current management team. Jim Whitehurst is joining the senior management team of IBM and will be reporting to Ginni Rometty. IBM will maintain the existing headquarters of Red Hat in Raleigh, and also the company’s facilities, brands, and practices.

Jim Whitehurst – president and CEO of Red Hat, commenting on IBM acquisition of Red Hat, said: “When we talk to customers, their challenges are clear: They need to move faster and differentiate through technology. They want to build more collaborative cultures, and they need solutions that give them the flexibility to build and deploy any app or workload, anywhere.

“We think open source has become the de facto standard in technology because it enables these solutions. Joining forces with IBM gives Red Hat the opportunity to bring more open source innovation to an even broader range of organizations and will enable us to scale to meet the need for hybrid cloud solutions that deliver true choice and agility.”

Going forward, Red Hat will operate as a separate unit within IBM and will be reported as part of the latter’s cloud and cognitive software segment.

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