---
title: "IBM → Red Hat"
url: "https://mahouse.world/ma-deals/ibm-buy-red-hat-2018"
type: "M&A deal"
year: "2018"
author: "Ihor Vlasov"
reviewed: "2026-09-20"
---

# IBM → Red Hat

An all-cash purchase at $190 a share, $34bn in all — IBM's largest — for the open-source enterprise software company, at a 63% premium, to make IBM the supplier of the software layer on which companies run across several clouds.

An all-cash purchase at $190 a share, IBM's largest, aimed at the hybrid cloud market.

- **Acquirer:** IBM (United States)
- **Target:** Red Hat (United States)
- **Value:** $34B
- **Announced:** October 2018
- **Completed:** July 2019
- **Sector:** Technology
- **Deal type:** acquisition

## Why it mattered

IBM had lost the public cloud to Amazon and Microsoft and was losing its own customers to them; Red Hat's Linux and OpenShift container platform were the software those customers used to run applications on any cloud, and Red Hat's subscription model — free software, paid support — had made it the largest open-source company. Buying it gave IBM a product that grew, a relationship with every large IT department, and an argument: that the future was hybrid, with workloads on several clouds and on-premises, and that the company that managed the layer between them would matter more than any one cloud.

The premium and the price — about 10 times revenue for a company growing at 20% — were criticised, and IBM borrowed most of it. Red Hat was kept as a separate unit under its own chief executive, Jim Whitehurst, who later became IBM's president, and its neutrality across clouds was preserved because it was the point.

## What it left behind

Red Hat as IBM's growth engine for the following years, and the hybrid-cloud strategy that IBM's spin-off of its infrastructure-services business (Kyndryl, 2021) completed. It is the model for a legacy incumbent buying the open-source standard of the next architecture and leaving it alone, and — in its financing — an example of a cash deal at scale in a high-yield market.

— Ihor Vlasov, M&A FinTech Expert. Last reviewed 2026-09-20. https://mahouse.world/authors/ihor-vlasov