IBM is acquiring Red Hat, the world's leading provider of open source cloud software, in a deal valued at about 34 billion U.S. dollars, according the latest announcement issued by both companies.
IBM will acquire all of the issued and outstanding common shares of Red Hat for 190 dollars per share in cash. Shares of Red Hat closed at 116.68 dollars on Friday before the deal was announced.
Red Hat's shares went up more than 45 percent to trade at about 170 dollars in morning session on Monday.
"The acquisition of Red Hat is game-changer... IBM will become the world's #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their business," said Ginni Rometty, IBM chairman, president and chief executive officer, in a statement released on Sunday.
Jim Whitehurst, president and CEO of Red Hat, said in the same statement that joining force with IBM will provide the company with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation.
Upon closing of the acquisition, Red Hat will join IBM's Hybrid Cloud team as a distinct unit. Whitehurst will join IBM's senior management team and report to Rometty.
The acquisition is by far IBM's largest deal ever. Shares of IBM dipped nearly 3 percent on the news of the deal, which indicated that investors were concerned that the company had overpaid for the deal.
Latest comments