IBM Corp officially disclosed on Sunday that it is going to acquire US Software Company Red Hat Inc for $34 billion. And as per the details available to our Cybersecurity Insiders, IBM is likely to pay $186- $190 per share in cash to bail out the debt-ridden proprietor of Linux software.
According to the trade analysts, IBM’s latest acquisition will by far be the biggest acquisition for the maker of mainframe computers.
Probably, Ginni Rometty’s (the Chief Executive of IBM) plan is to diversify his company’s technology hardware and consulting business into higher margin products and services.
Red Hat which was termed as an apt competitor to Microsoft’s proprietary Windows software is nowadays finding it hard to maintain its stance in the open source software business.
Although still there is a huge demand for Linux OS versions in the Corporate world, the North Carolina based company is finding it hard to mince money from its corporate customers to provide customized features, maintenance, and technical support.
As the Raleigh based company has succeeded in keeping its cash registers buzzing in cloud computing business, Rometty’s company must have eyed the revenue and might have grabbed the company to gain scale and fend off competition(if & when possible).
Analysts say that IBM will aim to give a tough competition to Amazon.com Inc and Alphabet subsidiary Google in the business of cloud computing from now on.
NOTE 1– IBM’s deal to acquire Red Hat will be closing in the 2nd half of 2019 and the “International Business Machines Corporation” has decided to put down its share repurchase program in 2020 and 2021 to help pay for the deal.
NOTE 2- IBM has also announced that Red Hat Inc will still run under the leadership of the current CEO Jim Whitehurst after the deal and all the management team, headquarters, facilities, brands, and practices will be retained as they are now.