IBM paid $34 billion for Red Hat ! Yes. 34 billion.
190$ per share, this is a huge premium and it shows how desperate IBM was to catch up with AWS, Google and Microsoft.
Why Red Hat ?
On a conference call, IBM’s CEO Gini Rometty said the Red Hat deal, expected to close in the second half of 2019, is about preparing for the second chapter of the cloud.
Rometty noted that most companies are 20 percent along the cloud journey and "renting compute power to cut costs." The next 80 percent is about hybrid cloud.
Both Red Hat and IBM said the combined company will accelerate "hybrid multi-cloud adoption.”
With Red Hat it seems that IBM has it`s last shot.
Microsoft's acquisition of GitHub this year, which was completed in October, paved the way for IBM's acquisition, legitimizing the importance of open source to traditional software providers, according to Chris Gardner, Forrester senior analyst.
Microsoft also realized that it couldn't compete in the hybrid market without open source, and its acquisition was a move to meet developers where they are.
IBM saw a revenue decline almost every quarter after Ginni Rometty took the role of CEO in 2012. Even Warren Buffett gave up on IBM last year and reduced its stake in the company by almost 94 per cent.
Now the aquisition of Red Hat, which came quite as a suprise for the markets, seems to be IBM´s last bet.