Tech Brief: IBM Acquires Red Hat for US$ 34B in Big Enterprise Cloud Push

When Facebook purchased WhatsApp for US$ 22 billion in 2014, it was the biggest software acquisition in tech history, until Microsoft came along and swooped professional social network LinkedIn for US$ 26.2 billion in 2016. Two years later, that record has been broken again, this time by software giant IBM which has announced its move to acquire enterprise open-source software services provider Red Hat for US$ 34 billion in cash and debt. It's not however the biggest tech buyout ever, though, what with Dell acquiring VMware owner EMC for US$ 67 billion back in 2016.

"The acquisition of Red Hat is a game-changer. It changes everything about the cloud market," said IBM CEO Ginni Rometty, adding "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." This is not the first time IBM and Red Hat have crossed paths with one another. The Armonk-based company, along with Compaq, Novell and Oracle Corporation, acquired minority stakes in Red Hat almost 20 years ago (March 1999, to be specific), which was then a privately held firm with investments from Intel and Netscape.

While the strategic stake controlled by these companies in 1999 was to fend off competition from Microsoft in the corporate server business, the newly announced acquisition comes at a time when seasoned players like Amazon (Amazon Web Services), Microsoft (Azure), Google (Google Cloud Platform/G Suite), Oracle and Alibaba, not to mention IBM, are locked in a six-way fight for a bigger share of the enterprise cloud market that's collectively worth about US$ 65 billion. Prior to this deal, Red Hat had a market capitalisation of about US$ 20.5 billion.