Federal Government Approves IBM’s Acquisition of Red Hat

Federal Government Approves IBM’s Acquisition of Red Hat

Federal Government Approves IBM’s Acquisition of Red Hat

Technology giant IBM disclosed earlier this week that the US Federal Government’s Department of Justice has signed off on its acquisition of Raleigh based open source software company Red Hat.

According to the regulatory filing, the acquisition of Red Hat was for a whopping $34 Billion.

“On May 3, 2019, IBM was informed that the U.S. Department of Justice has concluded its review of IBM’s proposed acquisition of Red Hat without remedies or conditions and received a notice of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,” IBM said in the filing with the US SEC. “IBM and Red Hat continue to work with competition authorities in other jurisdictions, and IBM continues to expect the transaction to close in the second half of 2019.”

 

Following this announcement, IBM shares traded slightly low, while Red Hat shares spiked in pre-market trading.

The deal was announced last October but was facing issues in obtaining regulatory approval.  In its earnings conference call in April, IBM stressed the impact that the deal would have on Big Blue, especially in the cloud computing field.

Jim Kavanaugh, IBM’s Senior Vice President and Chief Financial Officer, declared: “First and foremost we’re very excited about the potential combination of IBM and Red Hat as we talked about I think in a handful of other areas around us accelerating the leadership in a $1 trillion hybrid cloud market. We believe this differentiates us as we move forward and we can’t be more excited when you look at Red Hat performance, exiting fiscal year 19 and what they reported and shared publicly, accelerating revenue up in the high teens, their backlog is up 22% if I remember correctly, strong margin contribution and they are delivering very strong cash flow.”

Per the deal between both the companies, it has been announced that Red Hat will continue to operate as a separate company under IBM ownership, and the company’s President and CEO Jim Whitehurst will remaining in-charge.

Megha Shah
Megha Shah
A dreamer, traveler, aspiring entrepreneur and a bookworm beyond repair, Megha Shah is extremely fond of writing and has been doing so since she was a child. Apart from being a part-time writer, Megha is currently in college, pursuing B. Com. (Hons). Megha is an ardent follower of ‘Hardship, Hustle and Heart’ and firmly believes in the power of hard work and destiny!
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