IT company IBM will buy software company Red Hat for $34 billion (Rs 2.34 lakh crore). Both are US companies.
On Tuesday, 9th July, IBM said that it is close to the acquisition of Red Hat. This will increase the company’s cloud computing business. According to news agency Reuters, it will be its biggest acquisition in IBM’s 108-year history.
Specializing in Red Hat’s Linux Operating Systems
For the Red Hat deal, IBM got approval from US regulators in May and regulators of the European Union in June.
Founded in 1993, Red Hat is an expert in Linux operating systems. This is the most popular open-source software and has the option of Microsoft’s software.
IBM CEO Ginni Rometty has focused on moving the company forward in the rapidly growing cloud, software, and services segment rather than the traditional hardware product.
He had become CEO in 2012. However, focusing on IBM’s new areas has not attracted investors every time.
During the transition from the computer hardware business, the company’s revenues also declined for many years.
However, compared to 2013, Cloud Revenue’s share of IBM’s total revenues has now increased 25 times.
Cloud Revenue reached $19 billion by the end of January-March quarter this year.
After IBM’s deal is completed, Red Hat CEO Jim Whitehurst and his team will remain in the company. Jim will attend IBM’s Senior Management and report to Ginni Rometty. IBM will maintain the headquarters of Red Hat in Raleigh, North Carolina.
Red Hat Specialises in Linux OS
Founded in 1993, Red Hat specializes in Linux operating systems, the most popular type of open-source software and an alternative to proprietary software made by Microsoft Corp. IBM has faced years of revenue declines as it transitions from its legacy computer hardware business into new technology products and services.
Red Hat CEO Jim Whitehurst and his management team will remain in place. Whitehurst will join IBM’s senior management team and report to Rometty.