The deal, which was first announced in October, is IBM’s largest acquisition and the company says it will “redefine the cloud market for business”.
IBM will acquire all of Red Hat's shares for a cash price of $190.00 (€169.00) per share, representing a total equity value of $34 billion (€30.3 billion).
An IBM statement said, “With Red Hat, IBM has acquired one of the most important software companies in the IT industry.”
Through the acquisition IBM aims to advance its position as a hybrid cloud provider, while enabling Red Hat to scale up its open source solutions and reach a wider range of clients.
IBM and Red Hat will together offer a “next-generation” hybrid multi-cloud platform based on open source technologies, such as Linux and Kubernetes.
"Businesses are starting the next chapter of their digital reinventions, modernising infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors," commented Ginni Rometty, IBM Chairman, President and CEO. "They need open, flexible technology to manage these hybrid multi-cloud environments.
"And they need partners they can trust to manage and secure these systems. IBM and Red Hat are uniquely suited to meet these needs.”
Red Hat will operate as a distinct unit within IBM and will retain its headquarters in Raleigh, North Carolina, as well as its brands.
Red Hat will also continue to be led by Jim Whitehurst and its current management team. Whitehurst is joining IBM’s senior management team, reporting to Ginni Rometty.
IBM has pledged to keep Red Hat’s open source independence and neutrality. “This includes its open source community leadership, contributions and development model, product portfolio, services, and go-to-market strategy, robust developer and partner ecosystems, and unique culture,” a statement said.
Open source innovation
Jim Whitehurst, President and CEO, Red Hat, commented, "When we talk to customers, their challenges are clear: They need to move faster and differentiate through technology.
"They want to build more collaborative cultures, and they need solutions that give them the flexibility to build and deploy any app or workload, anywhere. We think open source has become the de facto standard in technology because it enables these solutions.
"Joining forces with IBM gives Red Hat the opportunity to bring more open source innovation to an even broader range of organisations and will enable us to scale to meet the need for hybrid cloud solutions that deliver true choice and agility."