American IT corporation IBM is buying Red Hat for 34 billion US dollars. Red Hat is also known as Red Hat Enterprise Linux that operates software and servers.

According to CNBC, it is the third largest tech deal in the history of the US  tech industries. The two companies made the big announcement this Sunday.

It might seem strange to spend billions of dollars on buying a software company like Red Hat that itself gets hefty contributions from other companies for sales each year. IBM has been contributing to Linux for quite a long time along with other projects like Facebook, Google, and ExxonMobil.

Earlier this year, Microsoft did a collaboration with GitHub to purchase $7.5 billion. This same goes to Amazon and Google; both were participating in partnering for gaining the edge of cloud computing.

IBM struggled to adopt the cloud computing monitors in this modern century. Despite the lack of sales for the past five years, they predicted this acquisition would bring a considerable change to their revenues.

“IBM’s commitment to keeping the things that have made Red Hat successful – always thinking about the customer and the open source community first – make this a tremendous opportunity for not only Red Hat but also open source more broadly. Since the day we decided to bring open source to the enterprise, our mission has remained unchanged. And now, one of the biggest enterprise technology companies on the planet has agreed to partner with us to scale and accelerate our efforts, bringing open source innovation to an even greater swath of the enterprise.”
-Paul Cormier, President, Products and Technologies, Red Hat.

Even Red Hat struggled with its revenues back in June. The software giant suffered a 14% drop in sales due to financial issues. Later on, the shares cut down to an addition of 17% which disappointed the investors.

Red Hat is a major player for cloud computing which offers a range of products to manage applications that run on numerous cloud computing services. This will make it easy to build cloud computing platforms in their data centers.

“The acquisition of Red Hat is a game-changer, it changes everything about the cloud market.”
– Ginni Rometty, CEO of IBM

The two tech companies will strive to achieve their best by enhancing other cloud providers such as Google Cloud, Microsoft Azure, Alibaba, and Amazon Web Services. Red Hat will associate with IBM’s Hybrid Cloud team to deliver a good standard of heritage and development. And this will remain a preserving culture between the two tech industries.

“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.”
-Jim Whitehurst, President and CEO, Red Hat

The management team of Red Hat will be led by CEO Jim Whitehurst while IBM will help to facilitate the headquarters of Red Hat, continue to maintain a positive image.

An excellent move for the two companies! Stay tuned!