IBM set to acquire North Carolina-based Red Hat in $34B deal

IBM is reportedly nearing a deal to acquire Red Hat, the software company valued at $20 billion

Official: IBM to gobble Red Hat for $34bn – yes, the enterprise Linux biz

The Center for Media Justice launched an online petition a year ago to stop IBM from developing cloud resources that would use facial recognition technology to identify undocumented immigrants so that they can be detained, denied visas and deported from the United States.

Red Hat CEO Jim Whitehurst claimed that the acquisition by IBM would provide the organisation with even more resources to drive Linux into the cloud. It earned its distinction for being one of the first companies to make a living from open source software the way it was meant to be, by offering services in relation to operating and maintaining Linux systems, especially on the business side.

IBM, which has a market valuation of $114-billion, has seen revenue decline by nearly a quarter since Rometty took the CEO role in 2012. "This is a lot different than what IBM has done in the past with its cloud and services business". At the same time, Red Hat will benefit from IBM's hybrid cloud and enterprise IT scale in helping expand their open source technology portfolio to businesses globally.

IBM also emphasized that it would remain committed to Red Hat's open governance policy. This will likely not impact IBM's stature in the public cloud where the companies have a presence, but not almost as much as the private cloud.

Founded in 1993, Red Hat launched its famous version of Linux OS a year later, becoming a pioneering proponent of the open source movement that arose to counter giants like Microsoft whose models were based on keeping their source code secret. Companies like Facebook and Amazon have dabbled with Red Hat's open source knowledge before they went on to become a multi-million-dollar business. Its 2013 acquisition of Softlayer gave the company a public cloud toehold, but all the growth in public cloud computing is coming from the big three US providers, including the above-mentioned companies and Google Cloud. The question is how IBM's might and largesse in the digital world will influence the open source OS. "Red Hat has always been supportive of partners", he said.

"Imagine Red Hat with the ability to invest even more and faster to accelerate open source innovation in emerging areas". For interest's sake, prior to IBM's takeover of Red Hat for $34 billion, the largest software buyout in history was Microsoft's purchase of LinkedIn for $26.2 billion in 2016. It's well-known for trying to integrate acquisitions into its huge organization, a process known internally as "blue-washing".

It's not immediately obvious to me how the marriage between IBM and Red Hat brings combined value to the market. "It remains to be seen if IBM can play the same role, which would be significant upside for IBM". The deal has been put up for approval by the board and shareholders of Red Hat. It took its name after a merger with another company, Red Hat Linux.

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