Tech

IBM acquires software firm for $34bn

IBM acquires software firm for $34bn
By Editor

IBM Corp said on Sunday it had agreed to acquire US software company Red Hat Inc for $34 billion, including debt, as it seeks to diversify its technology hardware and consulting business into higher-margin products and services.

The transaction is by far IBM’s biggest acquisition. It underscores IBM Chief Executive Ginni Rometty’s efforts to expand the company’s subscription-based software offerings, as it faces slowing software sales and waning demand for mainframe servers.

Read also: Qualcomm drags Apple over $7bn owed in royalties

IBM, which has a market capitalisation of $114 billion, will pay $190 per share in cash for Red Hat, a 63 per cent premium to Friday’s closing share price.

Founded in 1993, Red Hat specializes in Linux operating systems, the most popular type of open-source software, which was developed as an alternative to proprietary software made by Microsoft Corp.

 

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