The Biggest Technology Acquisition of 2018: Everything You Need to Know About Red Hat Redemption by IBM for $ 34 Billion

Once the transaction is concluded. IBM will also become the world's leading hybrid cloud provider. (Image: Reuters)

IBM Corp. announced the acquisition of Red Hat Inc, a leading software and services provider based on the best-known and widely used Linux open source operating system for an amount of $ 34 billion. IBM will buy all Red Hat shares at a price of $ 190 per share, representing a premium of more than 60% over Red Hat's closing price on Friday. Prior to the transaction, Red Hat's market capitalization was approximately $ 20.5 billion. On the other hand, IBM has a market capitalization of $ 114 billion.

One of the largest technological acquisitions ever made

This is the largest transaction ever made by IBM. The acquisition of Red Hat is also the third most important in the history of the US technological space. The other two most important contracts are: – $ 67 billion merger between Dell and EMC in 2016 and acquisition by JDS Uniphase of the SDL optical component supplier for approximately $ 41 billion in 2000.

Qu & # 39 is Red Hat?

Founded in 1993, Red Hat – a company with a business turnover of $ 3 billion – is known for the distribution and support of Red Hat Enterprise Linux, as well as Other technologies commonly used in data centers. Red Hat uses a community-based approach, unlike traditional software companies that build proprietary systems, and distributes the source code of its core products that can be downloaded for free.

Previously an idealistic, open source software movement has become an essential part of many large companies such as Facebook, Google and Walmart, among others. Microsoft, who was not a big fan of open source and who even mocked it openly in the past, has released several open source projects. It recently completed a $ 7.5 billion acquisition of the GitHub code and collaboration hosting company to strengthen open source engagement on Azure.

During the last fiscal year ended February 28, Red Hat made a profit of $ 259 million for a turnover of $ 2.92 billion. The company's turnover has increased by 21% between the fiscal years 2017 and 2018.

Cloud computing

Red Hat, a North Carolina-based company, will become a unit of the IBM Hybrid Cloud division and will be led by CEO Jim Whitehurst, who will join IBM's management team and report to General Manager Ginni Rometty.

Red Hat is not a major host of cloud services. However, it is one of the leading players in cloud services creation and offers a wide range of other products that help companies build cloud-based platforms in their own data centers.

Once the agreement is concluded. IBM will also become the world's leading hybrid cloud provider. The hybrid cloud is a mix of private cloud and public cloud. While the private cloud is designed for a customer, the public cloud is usually defined as a cloud service offered over the Internet.

[1965] What it means for IBM

This agreement marks the acquisition of one of the most sought-after, high-end software companies in the information technology sector and the largest technology portfolio open source in the world. Red Hat charges corporate customers for technical support and maintenance of custom features, providing a lucrative source of IBM subscription revenue.

According to IBM CEO Ginni Rometty, the acquisition of Red Hat will change the game. Free cash flow and gross margin are expected to be relutive over the next 12 months. It will accelerate revenue growth and generate a strong and growing dividend.

Once the agreement is reached, IBM – which has so far struggled to keep pace with companies such as Microsoft, Amazon and Google in the public cloud market – should

Red Hat in India

In India, the main systems operated on Red Hat would include Indian Railways. , Goods and Services Tax (GST) and Unique Identification Authority of India (Aadhar). Bombay Stock Exchange and National Stock Exchange have also stopped using proprietary systems and have been using Red Hat's open source systems for 2-3 years. In addition, the organization of the employee provident fund and the Central Board of Direct Tax also make extensive use of Red Hat services and solutions, as well as several other corporate clients and government agencies.

During your speech at the Red Hat Forum 2018 in Bangalore earlier this month. Yatrik Vin, Chief Financial Officer of the NSE Group, said: "… opting for Open Source with a partner like Red Hat has allowed them to implement their innovation and disruption as they are stable and scaled. If a real-time and critical service like ESN can rely on open source, the future is indeed open source.