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October 15, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

IBM completes $34B acquisition of Red Hat

IBM has announced the completion of its acquisition of the open source software company Red Hat for $190 per share in cash, which represents a total equity value of approximately $34 billion. The transaction is the largest acquisition in the history of Armonk-based IBM.

IBM will maintain Red Hat’s headquarters in Raleigh, North Carolina, as well as its facilities, brands and practices. Red Hat will operate as a distinct unit within IBM and will be reported as part of IBM’s Cloud and Cognitive Software segment. Red Hat President and CEO Jim Whitehurst will join IBM’s senior management team, reporting to IBM Chairwoman, President and CEO Ginni Rometty. The Red Hat management team will remain in place.

“Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors,” Rometty said. “They need open, flexible technology to manage these hybrid multicloud environments. And they need partners they can trust to manage and secure these systems.”

IBM stated the Red Hat acquisition will contribute approximately two points of compound annual revenue growth over a five-year period. Red Hat’s fiscal year 2019 revenue was $3.4 billion, up 15 percent year-over-year, while its fiscal first quarter 2020 revenue was $934 million, up 15 percent year-over-year.