IBM is buying open-source software pioneer Red Hat

IBM is buying open-source software pioneer Red Hat for $34 billion, in the biggest acquisition in the IT veteran’s 107-year history. The deal will help both companies accelerate the move to cloud computing among big corporate clients, as well as providing a much-needed boost to IBM’s revenue growth… IBM is paying $190 per share in cash for Red Hat, a 63 per cent premium to Friday’s closing share price, giving it an enterprise value of $34 billion. The company’s latest push into open source software follows a similar move by Microsoft, whose $7.5 billion acquisition of code-sharing site Github closed last week. The tech industry’s biggest deal so far this year comes as IBM’s long-awaited return to revenue growth seemed to falter in its most recent quarterly results… Red Hat, which will retain its headquarters in Raleigh, North Carolina following the takeover, has been the company most closely associated with Linux and other open-source technologies since it was founded 25 years ago. Today, it sells infrastructure tools and services to businesses which use its open-source software for servers and cloud computing. IBM and Red Hat have already been partners for several years…

Tim Bradshaw, James Fontanella-Khan and Arash Massoudi