IBM completes $ 34 billion acquisition of Red Hat

IBM has finalized its $ 34 billion acquisition of Red Hat, companies said Tuesday.

IBM's shares remained unchanged during the pre-market trading phase, while the Red Hat shares were halted.

The deal was originally announced in October, when companies announced that IBM would buy all Red Hat shares at $ 190 each.

The acquisition of Red Hat, an open source software company, marks the closing of the largest contract ever concluded by IBM. This is one of the most important in the history of American technology. Excluding the AOL-Time Warner merger, it follows the $ 67 billion merger between Dell and EMC in 2016 and SDL's $ 41 billion acquisition of the optical component supplier SDL in 2000.

Under the terms of the agreement, Red Hat will now be a unit of IBM 's hybrid cloud division, according to the initial announcement. Jim Whitehurst, CEO of Red Hat, would join IBM's management and report to Ginni Rometty.

Previously, IBM hoped that its acquisition of Red Hat would help it to work more in the cloud, one of its four major growth drivers, which also includes social, mobile and badytics networks. The company is lagging behind Amazon and Microsoft in the cloud infrastructure industry. IBM has seen three consecutive quarters of declining its business from one year to the next. However, some badysts hope that the Red Hat operation will allow them to create new business.

In an April note, Nomura Instinet badysts led by Jeffrey Kvaal said: "OpenShift [a Red Hat product] should enable IBM to gain new customers and new workloads as organizations begin deploying mission-critical applications, from onsite solutions to public or private clouds. "

Goldman Sachs, J.P. Morgan and Lazard advised IBM on the Red Hat contract. Morgan Stanley and Guggenheim advised Red Hat.A flawless stay

Jordan Novet of -CNBC, Alex Sherman and Lora Kolodny contributed to this report.

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