IBM-Red Hat deal: What the companies say

IBM announced yesterday that it is buying Red Hat for $34 billion, making it IBM’s largest deal to date and the third largest in the history in the US tech industry.

After announcing the plan to close the deal sometime in the second half of next year, executives from the two companies held a joint conference call fleshing out the details. Here’s what they had to say.

According to Arvind Krishna, Senior Vice President of Hybrid Cloud at IBM, this move represents a “game changer” that will redefine the cloud market. Krishna was joined by Paul Cormier, Executive Vice President and President of Products and Technologies at Red Hat.

As a result of the acquisition, Red Hat will become a unit of IBM’s Hybrid Cloud division while Red Hat CEO Jim Whitehurst joins IBM’s senior management team, reporting directly to Chairman, President and CEO Ginni Rometty.

According to Rometty, “IBM will become the world’s Number 1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.” Krishna said Red Hat will be important to helping IBM reach that goal.

In some ways, the acquisition of Red Hat by IBM is not a complete surprise. Last year the companies announced a partnership to insure that Red Hat’s OpenStack private cloud platform and its Ceph Storage would run in IBM’s cloud and be managed by the same tools they use to manage their on-premises deployments.

Both companies have also been notable players in the open-source market. Some of their joint accomplishments involve creating some of the fastest supercomputers in use today, built on IBM systems and running Red Hat Linux to address some of the world’s largest scale problems.

Red Hat distributes and supports Red Hat Enterprise Linux and sponsors Fedora (free for anyone to use, modify and distribute) as well as other technologies used in data

They companies said Red Hat will continue operating as a separate brand for the foreseeable future. IBM sees no reasons for company locations to change. At a recent IBM all-company meeting Rometty affirmed that the Red Hat culture would be maintained.

IBM said it remains committed to open source and to its participation in the open source community. Both IBM and Red Hat will continue to support open-source efforts such as Patent Promise, GPL Cooperation Commitment, the Open Invention Network and the LOT Network, they say.

Cormier said that Red Hat will continue its work with its partners. CoreOS is now part of Red Hat, and the company is always tweaking its technology to make it work better and serve customers and partners, he said, and that won’t change. He said he anticipates no changes in the basic Red Hat roadmaps because they were built around what customers ask for.

Krishna said IBM will is to promote Red Hat Linux and OpenShift as standard technologies while also supporting other cloud technologies, including public clouds.

IBM’s acquisition of Red Hat will cost the company nearly a third of its value.

More details are available in the press release.