IBM Makes Another Cloud Move, Buys Red Hat

The cloud computing space may be about to shift again due to a dramatic weekend M&A announcement from IBM.  The industry giant has announced an agreement to acquire the Linux specialist Red Hat.  

It has now been five years since IBM bought SoftLayer to give its cloud ambitions a boost, but while that certainly helped it didn’t solve the problem of keeping up with the likes of Amazon and Google and offset declines in their legacy businesses. Now they’re seeking to do it again, this time bringing one of the biggest open source cloud distributors in house.

The deal will cost IBM some $34B, a 60% premium above where Red Hat had been trading. Red Hat will continue to operate as a separate unit within IBM’s Hybrid Cloud group.

It’s a big M&A, but just what the ultimate effects will be are bit hard to get a handle on. It seems as if this moves IBM in the direction of being a common supplier to the major cloud providers, as well as itself of course. That position perhaps enables them to better empower multi-cloud solutions for the enterprise markets. But how that plays out depends on a lot of factors that are unforseeable for now.

 

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Categories: Cloud Computing · Mergers and Acquisitions · Software