IBM has just made the largest acquisition in its history by acquiring Red Hat, an open source software publisher and leading distributor of the GNU / Linux operating system, for 34 billion dollars. This acquisition should allow the American group to strengthen its presence in the very lucrative cloud market.
Big Blue will acquire all of the stock in Red Hat at a price of $ 190 each for a total value of approximately $ 34 billion. To finance this important transaction, carried out partly on its own funds and through debt, IBM will however suspend its share buyback plan in 2020 and 2021. The transaction should be approved during the second half of 2019.
Become the premier hybrid cloud provider
Why is IBM paying such a sum to acquire Red Hat? Founded in 1993, Red Hat is present in 35 countries for a market capitalization of $ 20.5 billion (compared to $ 114 billion for IBM). The company now offers a wide range of products and services relating to storage, mobility, the operating system and cloud computing, in the form of subscriptions. An economic model that provides regular pensions.
And it is in particular to diversify its historical activities and accelerate in the field of the cloud that IBM got its hands on Red Hat. Big Blue thus aims to become ” the # 1 hybrid cloud provider in a fast-growing emerging market “. ” The acquisition will generate free cash flow and gross margin within 12 months, accelerate revenue growth and support a strong and growing dividend », Continues the American group.
It is therefore intended that Red Hat will operate as a separate unit within IBM’s hybrid cloud team. The group also claims “ that it will maintain Red Hat’s legacy of open source innovation, expanding its broad portfolio of technologies and strengthening its developer community “.