IBM snaps up Red Hat for $34 billion

Big Blue CEO calls the deal a "game changer" for the hybrid cloud market

IBM and Red Hat merger

IBM and Red Hat have reached an agreement under which Big Blue will acquire open source cloud software provider Red Hat for approximately $34 billion.

In a joint statement, IBM chairman and CEO Ginni Rometty called the acquisition of Red Hat a "game-changer" for the cloud market.

According to Big Blue, the market is "proprietary" by nature and, as a result, often prevents data from being more portable, thus holds back business workloads from being placed on hybrid cloud systems.

By purchasing Red Hat, Rometty said that IBM could become the world's number one hybrid cloud provider by helping businesses migrate to its cloud systems.

"Most companies today are only 20% along their cloud journey, renting compute power to cut costs," said Rometty. "The next 80% is about unlocking real business value and driving growth." 

"This is the next chapter of the cloud. It requires shifting business applications to hybrid cloud, extracting more data and optimising every part of the business, from supply chains to sales."

The two companies have enjoyed a 20-year partnership, with IBM serving as an early supporter of the Red Hat Enterprise Linux and, more recently, with its work bringing Kubernetes to hybrid cloud customers.

Within the terms of the deal, IBM has said it will remain committed to Red Hat's open source community and its developer ecosystem. The company will also sit as a distinct unit within Big Blue, keeping the independence and neutrality of Red Hat's open source development heritage and CEO Jim Whitehurst and its current management team will also stay at the helm.

"Open source is the default choice for modern IT solutions and I'm incredibly proud of the role Red Hat has played in making that a reality in the enterprise," said Whitehurst.

"Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience - all while preserving our unique culture and unwavering commitment to open source innovation."

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