Advanced Computing in the Age of AI | Monday, October 18, 2021

IBM Jolts Cloud Market with Red Hat Deal 

In a bold stroke that promises to shake up the hybrid cloud market, IBM is acquiring open source leader Red Hat.

"The acquisition of Red Hat is a game-changer,” asserted IBM CEO Ginni Rometty said in announcing the acquisition. "IBM will become the world's number one hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

The blockbuster deal is valued at $34 billion. IBM said Sunday (Oct. 28) it would acquire all shares of Red Hat for $190 per share in cash. It represents a 63 percent premium on Red Hat’s closing stock price on Friday (Oct. 26). That would make the acquisition the largest in the long and storied history of IBM (NYSE: IBM).

The combination gives IBM a leg up in the fierce competition to deliver a range of micro-services based on key open source cloud technologies such Kubernetes container orchestrators, OpenShift and other multi-cloud management and automation tools.

The acquisition also represents a bet by IBM that open source technologies will continue to drive enterprise cloud deployments as users look to diversify beyond current public cloud leaders Amazon Web Services and Microsoft Azure.

About the author: George Leopold

George Leopold has written about science and technology for more than 30 years, focusing on electronics and aerospace technology. He previously served as executive editor of Electronic Engineering Times. Leopold is the author of "Calculated Risk: The Supersonic Life and Times of Gus Grissom" (Purdue University Press, 2016).

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