IBM has just announced the closing of its $34 billion acquisition of cloud computing firm Red Hat. The tech giant had originally announced the deal in October, marking their biggest acquisition ever; the second largest tech merger to date, as well. The biggest tech merger was Dell’s $67 billion buy of EMC, in 2015.
This new deal comes at a time when IBM has been losing momentum. Still maintaining a large campus that employ several thousand people (in RTP), IBM is definitely not the Triangle behemoth it once was—down to fewer than 10,000 employees. Inversely, Red Hat has been steadily growing their workforce over roughly the same period, which now stands at nearly 14,000. When all is said and done, Red Hat workers will see a little bump in value, receiving $190 cash for every share of stock they own.
IBM chairman, president, and CEO Ginni Rometty comments, “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.”
This deal is expected to surpass the biggest corporate merger in the history of North Carolina: Duke Energy’s $30+ billion deal (including debt) of Progress Energy, in 2012.
Rometty goes on to say that IBM needs open and flexible technology to better manage these hybrid multi-cloud environments. Also, they need partners they can trust to not only manage these systems but secure these systems. He attests, “IBM and Red Hat are uniquely suited to meet these needs. As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come.”
In the past, IBM had said it hopes the acquisition of Red Hat will help them to increase their workload in the cloud computing world. This is one of the company’s four key growth drivers (which includes social, mobile, and analytics as well). Obviously, IBM would have a lot of ground to make up to catch up with the likes of cloud infrastructure business leaders Amazon and Microsoft.
The IBM/Red Hat deal has received regulatory approval in both the United States and Europe. When all is said and done, Red Hat will operate as a separate business group with IBM as an umbrella company, with continued leadership from CEO Jim Whitehurst.