International Business Machines (IBM) Corp. will buy Red Hat, a US-based software company, for $34 billion, including debt. This is by far IBM's largest acquisition.
With this acquisition, IBM will expand its subscription-based software offerings, as it faces slowing software sales and waning demand for mainframe servers.
For acquiring Red Hat, IBM will pay $190 per share in cash. IBM, founded in 1911, has a market capitalization of $114 billion.
Ginni Rometty, Chairman, President and Chief Executive Officer, IBM, said, "The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. 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."
Founded in 1993, Red Hat is headquartered in Raleigh, North Carolina. It 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.
Jim Whitehurst, President and CEO ofRed Hat, said, "Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience all while preserving our unique culture and unwavering commitment to open source innovation."