IBM acquires Red Hat to advance its cloud unit.
The deal for $34 billion is the largest acquisition by IBM and one of the largest in the tech industry.
CEO Jim Whitehurst the CEO of Red Hat will continue to head the company even after the acquisition. He will then report to Ginni Rometty, the CEO of IBM, says the company.
IBM plans on expansion in cloud computing. IBM gets about 25 percent of its total revenue through cloud computing, while it was just 4 percent in 2013, which shows good growth.
Red Had gets a revenue of $3.4 billion for Feb fiscal year 2019. This is almost a 15 percent increase from what it was a year back. Revenue for the June quarter was at $934 million.
With most enterprises getting at least a 20 percent footing into cloud transition, IBM intends to gain more footage in it. Further, many of them are shifting to cloud computing in other areas as well, like supply chains and core-banking system too.
With the new acquisition, IBM expects its revenue to increase. IBM intends to keep Red Hat independent so that it can deliver hybrid cloud stacks that are most innovative.
The deal has been openly announced to show that Red Hat has become a part of IBM. This will open more doors from developers and customers to know IBM’s commitment to multi-cloud deployment and developer programs.
The two companies have been operating together for quite a long time. IBM can now perform better, as it has integrated Red Hat software, which will make improve its annual revenue growth.
By keeping Red Hat independent, it can continue to support its hardware vendors. Both will function independently, though further integration will come in the near future. Expansion by partnering with other big cloud providers like Microsoft Azure, Alibaba, and Amazon Web Services will also continue.