IBM and Red Hat have reached an agreement which will see the former acquire the latter.

The agreement will see IBM acquire Red Hat’s issued and outstanding shares for $190 per share, representing a total of $34 billion.

This is a major acquisition for IBM which says that the deal will push it to the number one spot in the hybrid cloud provider sector once finalised.

“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” IBM chairman, president and chief executive officer Ginni Rometty.

“IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses,” Rometty added.

The acquisition is also good news for Red Hat. Last quarter the firm’s earnings came in below expectations. Despite revenue rising 14 percent year-on-year, the firm’s outlook for the next quarter was not strong.

The open-source cloud provider (among other things) will operate as a distinct unit within IBM once the acquisition is concluded. This will be done to preserve Red Hat’s open source development heritage says IBM.

“IBM’s commitment to keeping the things that have made Red Hat successful – always thinking about the customer and the open source community first – make this a tremendous opportunity for not only Red Hat but also open source more broadly,” Red Hat president of products and technologies, Paul Cormier said in a statement.

The acquisition has been approved by the board of directors at IBM as well as Red Hat. Following regulatory approval and customary closing conditions the acquisition is expected to be completed in the first half of 2019.

[Source – IBM] [Image – CC 0 Pixabay]