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Oct 29 2018

Big Blue Wears a Red Hat

For anyone who saw Microsoft's (second) premature release of a Windows 10 functional update as the big bang in October's IT news, here's an even bigger one: Just yesterday, 107-year-old ICT icon announced it would acquire 25-year-old open source giant Red Hat at a price of $34 billion in cash.

Both companies are touting the deal as the "most significant tech acquisition of 2018" that's bound to "unlock [the] true value of cloud for business." More specifically, the idea is to give the hybrid cloud delivery model favored by both vendors an extra boost. According to a joint press release (IBM version / Red Hat version), the merger enables them to address a central customer concern: While many companies are already using multiple clouds for non-essential workloads, they are still reluctant to move key business applications to such mixed environments, mainly because CSPs tend to favor proprietary solutions, thus impeding data portability, security, and consistent cloud and data management.

IBM and Red Hat believe they're strongly positioned to address this issue. Building on key technologies like Linux, containers, Kubernetes, multi-cloud management, and cloud management automation, they expect to be able to help clients create cloud-native business applications faster, improve portability and security of data and applications, and lay a solid foundation for standardized management policies and processes.

Both companies also suggest that the merger be seen as the logical consequence of a partnership that spanned two decades. IBM was an early supporter of Linux and the open source development/delivery model in general, bankrolling many efforts and contributing code and man-hours. This policy will continue, and so will existing Red Hat partnerships.

Upon closing of the acquisition, Red Hat will join IBM's Hybrid Cloud team as a distinct unit, with its chief Jim Whitehurst and his management team remaining in charge of the "subsidiary." Whitehurst also will join IBM's senior management team and report to Ginni Rometty. IBM intends to maintain Red Hat's headquarters, facilities, brands and practices.

The acquisition has been approved by the boards of directors of both IBM and Red Hat. It is subject to Red Hat shareholder approval. It also is subject to regulatory approvals and other customary closing conditions. It is expected to close in the latter half of 2019.

 
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