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July 9, 2019updated 10 Jul 2019 9:38am

IBM Closes Red Hat Deal: Promises “Benefits” by End-Summer 2019

"We will introduce a next-generation hybrid multicloud platform"

By CBR Staff Writer

IBM has closed its $34 billion Red Hat acquisition – one of the technology industry’s largest ever deals. The company said that “clients will begin benefiting from IBM and Red Hat before the end of the summer” in a short statement published today, promising the release of a “new hybrid multicloud platform”.

A conference call is scheduled for 12:30 Eastern Time. Red Hat president and CEO Jim Whitehurst emailed staff today to say that [IBM president and CEO Ginni Rometty] “understands, values and supports our unwavering commitment to open source. That will remain unaltered and we will continue to offer the choice and flexibility businesses have come to expect from us.”

IBM Closes Red Hat Deal 12 Days After EC Approval

The announcement comes less than two weeks after the European Commission unconditionally waved the deal through, saying “the merged entity would not have sufficient market power to shut out or marginalise its competitors”.

IBM closes red hat deal“With Red Hat, IBM has acquired one of the most important software companies in the IT industry. Red Hat’s pioneering business model helped bring open source –including technologies like Linux, Kubernetes, Ansible, Java, Ceph and many more –into the mainstream for enterprises,” IBM said.

Read this: Red Hat CEO: One Big Approval Done, One Cultural Clash to Work On…

The company added: “We will introduce a next-generation hybrid multicloud platform to help our clients innovate anywhere. Central to the platform is an infrastructure-independent common operating environment that runs anywhere—from any data center to multiple clouds to the edge.

“Based on open source technologies, such as Linux and Kubernetes, the platform will give businesses the freedom to securely deploy, run and manage data and applications anywhere they require. That means they can select the best architecture and approach to address the unique application, data and workload requirements of their business.”

CloudBees CEO Sacha Labourey told Computer Business Review: “As public cloud adoption is strongly accelerating, and VMW has secured strategic partnerships in the hybrid space, it will be interesting to see if this acquisition – and the close to one year it took to close it – is enough to make a significant dent on the market.

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He added: “Kubernetes, the new OS, is now free and IBM has not been able to get any critical mass in public cloud. What’s left to create a leading hybrid cloud vendor? The best 4 quarters will be interesting to watch. RH did an amazing job selling at that price.”

Red Hat: No Change to Open Source Culture, Just Growth… 



Red Hat’s Jim Whitehurst added: “Red Hat operates in more than 40 countries; IBM operates in more than 175 countries. We’ll be exploring how to expand the availability of Red Hat’s portfolio in more places… IBM will [meanwhile] be working to optimize its technologies for our portfolio and to enable customers to use them where Red Hat runs—including multiple public clouds.

“Combined with our own offerings and services and those from our already robust ecosystem, our goal is to offer customers the broadest choice as they create modern applications. Imagine customers having the flexibility to create any app using their choice of technology and running it anywhere on a common foundation that eases manageability and security.”

IBM issued $20 billion-worth of bonds in May, in part to finance the sale. It has also sold $1.8 billion worth of software products to India’s HCL; a deal that closed July 2.

To be updated with further details post-conference call.

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