IBM says it is to become the world’s leading hybrid cloud provider following the acquisition of cloud software provider Red Hat for $34 billion

In a joint press release, the companies announced that they have reached a definitive agreement under which IBM will acquire all issued and outstanding common shares of Red Hat.

Red Hat is the world’s leading provider of open source cloud software, serving clients such as Barclays, Lenovo and UPS with open source cloud and Linux middleware solutions, and training and consulting technologies. It also boasts blue-chip partnerships with AWS, Azure, Alibaba, and Google Cloud.

Last year Red Hat received around $2.5 billion in subscription revenues alone, even though it gives its principle enterprise platform away for free.

The two companies have a long-established relationship. IBM has been working with Red Hat for 20 years ever since it came out as an early supporter of Linux. In addition to forging enterprise-grade Linux solutions, the two firms played a large role in bringing container platform Kubernetes to the enterprise.

Once the acquisition is complete, Red Hat will join IBM’s Hybrid Cloud team as a distinct unit. IBM says it will preserve Red Hat’s ‘independence and neutrality’.

IBM hopes Red Hat’s solutions can help to modernise its customers’ old-fashioned IT infrastructure. While many companies today are deploying multiple cloud strategies, research shows that a staggering 80% of business workloads have yet to move to the cloud, with many put off by the proprietary nature of today’s cloud market.

IBM says it will accelerate hybrid multi-cloud adoption — a $1 trillion growth market — by shortening time to deployment and improving portability and security.

“IBM is committed to being an authentic multi-cloud provider, and we will prioritise the use of Red Hat technology across multiple clouds,” said Arvind Krishna, senior vice president, IBM Hybrid Cloud.

“In doing so, IBM will support open source technology wherever it runs, allowing it to scale significantly within commercial settings around the world.”

Paul Cormier, president of products and technologies for Red Hat, said the acquisition is a tremendous opportunity for the open source community.

“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,” he said.