IBM acquires Red Hat for record-breaking $34bn to close the gap in cloud computing
IBM has launched a rearguard action to wrest cloud computing dominance from Amazon, after agreeing to purchase open source software firm Red Hat in a $34bn deal – its largest ever and the third biggest technology deal on record.
IBM throws its Red Hat in the ring for cloud computing supremacy
The costly acquisition will help IBM gain a foothold in the fast-growing open source cloud services sector, augmenting its own expertise in more traditional cloud software.
Technology firms are becoming increasingly focussed on open source rather than closed software as consumers embrace the concept, driving a series of multi-billion dollar deals in the sector including Microsoft’s $7.5bn purchase of open source code-hosting platform GitHub and a $6.5bn Salesforce deal to acquire MuleSoft, specialists in merging multiple IT systems.
Under the terms of the deal, Red Hat will become a separate unit within IBM while its chief executive Jim Whitehurst joins IBM’s management team - reporting directly to Ginni Rometty, IBM’s own chief executive.
The Red Hat acquisition is beaten in value only by a $67bn merger between Dell and EMC in 2016 and a $41bn move by JDS Uniphase to buy out component supplier SDL back in 2000.
IBM has harnessed its cloud computing experience to fuel Watson, an AI intelligence capable of everything from 'painting' Wimbledon posters to playing Jeopardy.
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IBM is an American multinational technology company headquartered in Armonk, New York, United States, with operations in over 170 countries.
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