IBM to acquire cloud software firm Red Hat for $34B

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IBM has agreed to acquire open-source cloud software vendor Red Hat in a deal valued at $34 billion.

IBM said the acquisition will enable customers to securely move their business applications to multiple clouds. Red Hat offers big data, IT management and security services for the healthcare, financial services, government and telecommunications industries.

Red Hat will operate as a distinct unit within IBM's hybrid cloud team. IBM said it will "remain committed" to Red Hat's mission of open governance, open-source contributions and participation in the open-source community.

IBM also said it would work to preserve the neutrality of Red Hat's open-source development projects, and will build on Red Hat's partnerships with other cloud services, including Amazon Web Services, Google Cloud and Microsoft Azure, all of which are competitors of IBM's cloud service.

Ginni Rometty, chairman, president and CEO of IBM, noted that her company has collaborated with Red Hat to develop enterprise cloud solutions on Linux, a set of open-source operating systems, and called the Red Hat acquisition "the evolution of our long-standing partnership."

Jim Whitehurst, president and CEO of Red Hat, added: "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."

Mr. Whitehurst will continue to lead Red Hat with the company's current management team. He also will join IBM's senior management and report to Ms. Rometty.

IBM said it intends to maintain Red Hat's headquarters, facilities, brands and practices.

IBM expects to close the acquisition, which marks IBM's largest deal ever, in the latter half of 2019, according to CNBC. The acquisition is subject to approval from Red Hat's shareholders.

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