According to a joint statement by the companies, IBM will pay cash to buy all shares in Red Hat at USD 190 each. Red Hat’s software will become a unit of IBM’s Hybrid Cloud division and Red Hat CEO Jim Whitehurst will join the IBM team. IBM buy Red Hat

Buying Red Hat, which sells software and services based on the open-source Linux operating system, would give IBM a way to expand in cloud-based services at a time when only about 20 percent of businesses have made the move.

“The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, IBM Chairman, President and Chief Executive Officer. “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.

“Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs,” she said. “The next 80 percent is about unlocking real business value and driving growth. This is the next chapter of the cloud. It requires shifting business applications to hybrid cloud, extracting more data and optimizing every part of the business, from supply chains to sales.”

Red Hat is expected to top $3 billion in sales for the first time this year as its Red Hat Enterprise Linux product attracts business from a large number of customers.

The only tech deals that have been larger than this have been the USD 67 billion mergers between Dell and EMC in 2016 and JDS Uniphase’s USD 41 billion acquisition of optical component supplier SDL in 2000.

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