IBM’s $34 billion bid for Red Hat could be ‘game-changing,’ Wall Street predicts
Software giant IBM has purchased RedHat INC. This is another big tech deal. It is estimated that the cash value of the deal is about 33 billion dollars (Rs.2.42 lakh crore). With this deal, IBM has joined the list of top companies that offer cloud computing services. IBM will pay $ 190 for each Red Hat Share. The Red Hat stock was trading at 116.68 dollars on Friday. That means IBM is paying about 60 percent premium on a share.
This is one of the biggest deal in overall deals in 107 years of IBM’s history. IBM is one of the top company in early generations. But with emerging and expansion of cloud computing market IBM have been left behind. That deficit will be compensated with this purchase. Experts believe this purchase will certainly help in the company’s revenue.
“Buying Redhead is a key step towards our company. This changes the company’s appearance in the cloud market. We paid the correct price. This is a supreme company. This company has strong revenue sources, profitability and cash reserves, “said IBM chairman and CEO Ginny Ramti.
IBM’s earnings dropped nearly one-fourth since Ramti appointed as CEO in 2012. This fall was seen in the company’s hardware, software, and other services market. Faced many problems in competition with new companies, Especially in cloud, artificial intelligence and security software services sector.
According to Citigroup researcher Jim Suva, IBM has told shareholders that it has failed in cloud computing which will be compensated after the purchase of Red Hat. It has sent a message that it is working hard to make a good change to shareholders.
Redhat sold Lynx-based software services at $ 3 billion this year. Last year, the company acquired 11 contracts worth nearly $ 5 million. Also signed another 73 deals worth a million dollars.