IBM to acquire Raleigh-based Red Hat for $34 billion

RALEIGH, N.C. -- IBM is acquiring Raleigh-based Red Hat Inc., a major distributor of open-source software and technology, in a deal worth $34 billion, the companies announced on Sunday.

In a joint statement, IBM said it will pay cash to buy all shares in Red Hat at $190 each.

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CEO of Red Hat Jim Whitehurst will continue to lead Red Hat while reporting to IBM CEO Ginni Rometty.

"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 in a release. "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."

NC State Economics professor Michael Walden said that while disruption in the tech world is common, he didn't see this particular deal coming.

"Surprise. This was not on my radar screen," he said.

In an email sent to Red Hat's 12,600 employees, 2,000 of which work in its downtown Raleigh headquarters, Whitehurst reassured workers that "Red Hat is still Red Hat."

Walden hopes cutbacks, if any, are minimal and that the iconic logo doesn't leave downtown Raleigh.

I do see one downside in the sense that Raleigh's losing a headquarters. We don't have many," he said.

IBM's and Red Hat's partnership has spanned 20 years, with IBM serving as an early supporter of Linux, collaborating with Red Hat to help develop and grow enterprise-grade Linux and more recently to bring enterprise Kubernetes and hybrid cloud solutions to customers.

These innovations have become core technologies within IBM's $19 billion hybrid cloud business. Between them, IBM and Red Hat have contributed more to the open source community than any other organization.

On Oct. 26, IBM stock closed at $124.79. Red Hat shares are currently being traded at $116.83.