IBM and Red Hat, a provider of open source cloud software, have reached a definitive agreement under which IBM will acquire all of the issued and outstanding common shares of Red Hat for $190 per share in cash, representing a total enterprise value of approximately $34 billion. 

“The acquisition of Red Hat is a game changer,” said Ginni Rometty, IBM chairman, president and CEO. “IBM will become the world’s number one hybrid could provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

“Open source is the default choice for modern IT solutions, and I’m incredibly proud of the role Red Hat has played in making that a reality in the enterprise,” said Jim Whitehurst, president and CEO of Red Hat. “Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience — all while preserving our unique culture and unwavering commitment to open source innovation.”

This acquisition brings together the hybrid cloud providers and will enable companies to securely move all business applications to the cloud. Research shows that 80 percent of business workloads have yet to move to the cloud, held back by the nature of today’s cloud market. This prevents portability of data and applications across multiple clouds, data security in a multi-cloud environment and consistent cloud management, according to IBM and Red Hat. 

IBM and Red Hat plan on addressing this issue and accelerating hybrid multi-cloud adoption. Together, they hope to help clients create cloud-native business applications faster, drive greater portability and security of data and applications across multiple public and private clouds, all with consistent cloud management. In doing so, they will draw on their shared leadership in technologies such as Linux, containers, Kubernetes, multi-cloud management and cloud management and automation. 

The partnership between IBM and Red Hat has spanned 20 years, with IBM serving as an early supporter of Linux, collaborating with Red Hat to help develop and grow Linux and more recently to bring Kubernetes and hybrid cloud solutions to customers. 

With this acquisition, IBM will remain committed to Red Hat’s open governance, open source contributions, participation in the open source community and development model and fostering its developer ecosystem. In addition, IBM and Red Hat will remain committed to the continued freedom of open source via such efforts as Patent Promise, GPL Cooperation Commitment, the Open Invention Network and the LOT Network. 

IBM and Red Hat will also continue to build and enhance Red Hat partnerships, including those with cloud providers such as Amazon Web Services, Microsoft Azure, Google Cloud and Alibaba.

Upon closing of the acquisition, Red Hat will join IBM’s Hybrid Cloud team as a distinct unit, preserving the independence and neutrality of Red Hat’s open source development heritage and commitment, current product portfolio and go-to-market strategy, and unique development culture. Red Hat will continue to be led by Jim Whitehurst and Red Hat’s current management team. Jim Whitehurst will also join IBM’s senior management team and report to Ginni Rometty. IBM intends to maintain Red Hat’s headquarters, facilities, brands and practices. 

“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,” said Paul Cormier, president, products and technologies, Red Hat. “Since the day we decided to bring open source to the enterprise, our mission has remained unchanged. And now, one of the biggest enterprise technology companies on the planet has agreed to partner with us to scale and accelerate our efforts, bringing open source innovation to an even greater swath of the enterprise.”