IBM closes Red Hat deal for $34 billion

'Organisations are looking to open source and distributed cloud environment to enable new wave of digital innovation': IDC

IBM has officially gobbled up Red Hat for $34 billion, a technology acquisition considered one of the largest in history. 

Big Blue announced it planned to acquire the Linux developer last October. More recently, the U.S. Department of Justice approved the acquisition in May, and the EU gave its approval at the end of June, removing the last big roadblock. 

Red Hat will continue to be led by Jim Whitehurst and its current management team. Whitehurst is joining IBM's senior management team, reporting to IBM chairman and CEO Ginni Rometty.

Together, IBM and Red Hat will deliver what IBM said is “next-generation hybrid multi cloud” platform, a move that will “redefine the cloud market for business.” 

Red Hat's open hybrid cloud technologies will now be paired with the scale and depth of IBM's innovation and industry expertise, and sales leadership in more than 175 countries, IBM said. 

Based on open source technologies, such as Linux and Kubernetes, IBM said the platform will allow businesses to securely deploy, run and manage data and applications on-premises and on private and multiple public clouds.

“Businesses are starting the next chapter of their digital reinventions, modernising infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors,” said Rometty in a statement.  

"They need open, flexible technology to manage these hybrid multi-cloud environments. And they need partners they can trust to manage and secure these systems. 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."

Red Hat’s Whitehurst said customers need to move faster and differentiate through technology. 

“They want to build more collaborative cultures, and they need solutions that give them the flexibility to build and deploy any app or workload, anywhere," Whitehurst said in a statement. 

"We think open source has become the de facto standard in technology because it enables these solutions. Joining forces with IBM gives Red Hat the opportunity to bring more open source innovation to an even broader range of organisations and will enable us to scale to meet the need for hybrid cloud solutions that deliver true choice and agility."

IBM will maintain Red Hat's headquarters in Raleigh, North Carolina, 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.

IDC senior vice-president and chief analyst, Frank Gens, said organisations - as they seek to increase their pace of innovation to stay competitive - are looking to open source and a distributed cloud environment to enable a new wave of digital innovation that wasn't possible before. 

“Over the next five years, IDC expects enterprises to invest heavily in their journeys to the cloud, and innovation on it. A large and increasing portion of this investment will be on open hybrid and multi-cloud environments that enable them to move apps, data and workloads across different environments," said Gens. 

"With the acquisition of Red Hat, and IBM's commitment to Red Hat's independence, IBM is well positioned to help enterprises differentiate themselves in their industry by capitalising on open source in this emerging hybrid and multi-cloud world."