back to article Official: IBM to gobble Red Hat for $34bn – yes, the enterprise Linux biz

IBM intends to acquire enterprise Linux maker Red Hat for $34bn (£27bn). Following rumors of a deal over the weekend, Big Blue announced the move here, in the past hour, and Red Hat's take is here. IBM made an offer of $190 per issued and outstanding Red Hat share, which was accepted: the current price stands at $116. …

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  1. I can't believe its not butter

    Redhat employees - get out now

    You’re utterly fucked. Run away now as you have zero future in IBM.

    1. ivan5

      Re: Redhat employees - get out now

      Not necessarily, if they play it right they could take over IBM from the inside - the board and bean counters would only find out when they were thrown out.

      Open source for ever.

      1. Anonymous Coward
        Anonymous Coward

        Re: Redhat employees - get out now

        Not necessarily, if they play it right they could take over IBM from the inside - the board and bean counters would only find out when they were thrown out.

        Sort of like when AOL bought Time/Warner, and a year later it was all T/W executives running the company, not AOL?

        1. Alan Brown Silver badge

          Re: Redhat employees - get out now

          "Sort of like when AOL bought Time/Warner, and a year later it was all T/W executives running the company, not AOL?"

          Or when Google bought Doubleclick.

      2. Anonymous Coward
        Anonymous Coward

        Re: Redhat employees - get out now

        "Not necessarily, if they play it right they could take over IBM from the inside - the board and bean counters would only find out when they were thrown out."

        You're looking at IBM as a technology company that will benefit from being run by people that understand technology.

        IBM is a financial company that makes money from financing expensive legacy systems and service contracts. Software and hardware are just the bait on the hook.

        So the question is why would IBM pay so much? Red Hat appears to be reasonably healthy (growing in all reported areas at around 10%-15%/year) but was valued around the $20B mark that appeared to be a fair assessment given there's no large pile of cash or other obvious value to unlock.

        My suspicion is that IBM plan to hit all the third parties using Red Hat on their appliances with big subscription rises to squeeze out money in the short-to-mid term. I could be wrong but I think the majority of customers would look to move off Red Hat (we're already consolidating environments and pushing non-essential stuff to after the last Red Hat increases gave us a ~30% rise which resulted in a six figure subscription increases).

    2. Anonymous Coward
      Anonymous Coward

      Re: Redhat employees - get out now

      You’re utterly fucked. Run away now as you have zero future in IBM.

      That was my immediate thought upon hearing this. I've already worked for IBM, swore never to do it again. Time to dust off & update the resume.

      1. Jove Bronze badge

        Re: Redhat employees - get out now

        Another major corporate splashes out a fortune on a star business only to find the clash of cultures destroys substantial value.

        1. DropBear Silver badge

          Re: Redhat employees - get out now

          "Another major corporate splashes out a fortune on a star business only to find the clash of cultures destroys substantial value."

          I'm seriously unsure they have any interest in the business, the product or the personnel - just the PR and the "market share"...

          1. David Nash Silver badge
            WTF?

            It's all about the buzzwords

            That Red Hat page contains the word "cloud" about 45 times.

            And "Linux" only 6.

            1. Lars Silver badge
              Linux

              Re: It's all about the buzzwords

              "And "Linux" only 6".

              The word "linux" hasn't really ever been used commercially. IBM was rather instrumental in taking linux mainstream, or should I say mainframe, something that started in IBM Germany.

              The only TV add I can remember about linux was the one IBM made, with that young kid, 20 years ago?.

              Red Hat was of course my first linux in 98.

              With now more than 260 comments I know I am not going to read them all, much because they will be very similar, and largely negative. Quite frankly could anybody mention a merger met with great applause. I am still searching, to no avail.

              All the same, I wish them all the best, and linux will prevail regardless of how this works out.

          2. Jove Bronze badge

            Re: Redhat employees - get out now

            I'm seriously unsure they have any interest in the business, the product or the personnel - just the PR and the "market share"

            Read the briefs - the aim is clear, but neither business is hitting their targets. If they do not shape-up then there will be a shake-out.

        2. Anonymous Coward
          Anonymous Coward

          Re: Redhat employees - get out now

          Actually IBM culture was good until they splashed out on PwCc. That was the poison apple that destroyed both value and customer trust.

          1. Anonymous Coward
            Anonymous Coward

            @AC ... Re: Redhat employees - get out now

            Re: Redhat employees - get out now

            Actually IBM culture was good until they splashed out on PwCc. That was the poison apple that destroyed both value and customer trust.

            Sounds like a heritage IBMer who was in IGS. ;-)

            Sorry, son, but you're dead wrong. IBM's culture was shit long before they acquired PWC, in fact it was the guys in PWC who actually got it, and knew how to be good consultants. I've worked with a couple of the PwC partners on deals, and then met some of the staff that they mentored a decade later on other proejcts. Definitely good people.

            As someone who came in thru an acquisition... the stories I could tell you.

            As someone who was in an overlay position that was matrix'd in to the sales organization I saw it all.

            Posted Anon for all the obvious reasons.

            1. Lord Elpuss Silver badge

              Re: @AC ... Redhat employees - get out now

              "Sorry, son, but you're dead wrong."

              I disagree. I worked for IBM back in the 90s, pre PwCC, and loved it. The company had a culture, an identity, innovation and creativity, and some very very talented people. And that was in the 90s - not exactly IBM's best time. My dad worked there from '72 until he retired in '89, and constantly reminisced what a wonderful career he'd had.

          2. Jove Bronze badge

            Re: Redhat employees - get out now - @Anonymous Coward

            The rot had already set-in by then as was obvious from the numbers; IBM needed PWC to preserve it's position.

    3. Anonymous Coward
      Anonymous Coward

      Re: Redhat employees - get out now

      Wow man, as I wasn't depressed enough already. This is a sad day.

    4. Giovani Tapini

      Re: Redhat employees - get out now

      Start a new company and own your own fork. You clearly know how to do it.

      Don't let IBM to do to Linux what Oracle has done to Java.

    5. Ian Michael Gumby Silver badge
      Boffin

      @Butter Ball ... Re: Redhat employees - get out now

      Not exactly true.

      IBM will offer some key employees, back loaded retention packages.

      IBM will not touch Red Hat for a couple of years and may keep Red Hat a separate company as a wholly owned subsidiary indefinitely.

      (Yes I escaped from the borg after my gold plated handcuffs came off.)

      Google created Alphabet as their holding company which helped create 'glass walls' between divisions which also helped reduce the threat of Government intervention and calling Google a monopoly ...

      So there is a precedence also considering that Red Hat has its own strong brand ... don't want to weaken it.

    6. James Anderson

      Re: Redhat employees - get out now

      A short list of IBM aquistions of previously successfully companies then went nowhere:

      Encina, Rational , Informix, Greenplum,

      Feel free to add to the list. Given past performance red had will be renamed Blue Shorts and disappear from view within two years.

    7. ROC

      Re: Redhat employees - get out now

      Nah. Wait to see if an expected bidding war develops to run up the value of their stock options. I got a chunk of RH stock for my IRA (Individual Retirement Account) back when it was $6 per share, and am looking forward to see how much more it runs up for a while - already jumped from 116 just before the deal was announced this past weekend to around 170+ most of this following week, so biding my time. Just wish I had put more of my IRA funds into it back then....

  2. Anonymous Coward
    Anonymous Coward

    At least is isnt oracle or M$

    Perhaps IBM working on linux is a good thing? they used to have the best OS guys and if any remain then it could be a big plus, if not then redhat employees are not going anywhere.

    1. W@ldo

      Re: At least is isnt oracle or M$

      Sort of the lesser of evils---do you want to be shot or hung by the neck? No good choice for this acquisition.

    2. Anonymous Coward
      Anonymous Coward

      Re: At least is isnt oracle or M$

      honestly, MS would be fine. They're big into Linux and open source and still a heavily pro-engineering company.

      Companies like Oracle and IBM are about nothing but making money. Which is why they're both going down the tubes. No-one who doesn't already have them goes near them.

      1. Maventi

        Re: At least is isnt oracle or M$

        > honestly, MS would be fine. They're big into Linux and open source and still a heavily pro-engineering company.

        > Companies like Oracle and IBM are about nothing but making money. Which is why they're both going down the tubes. No-one who doesn't already have them goes near them.

        Disagree - all three are about making money, and all three are 'into' Linux in some shape or form. The only difference that separates Microsoft from the other two is that it has an enormous and entrenched marketshare in consumer and enterprise client computing that the other two don't. The downside to MS grabbing RH is that it would further reduce the options available for commercially supported 'enterprise' OS vendors. Those tech big companies have too much power as it is.

        1. Marshalltown

          Re: At least is isnt oracle or M$

          MS already has some interesting opensource efforts going with respect to R, where they have their "Revolutions" effort working on producing useful packages. MS has a page for the project on their website and they even recommend RStudio as an IDE.

      2. Anonymous Coward
        Anonymous Coward

        Re: At least is isnt oracle or M$

        But guess who Oracle gets its Linux from...

        This could be interesting

        1. Dan 55 Silver badge

          Re: At least is isnt oracle or M$

          But guess who Oracle gets its Linux from...

          Linux isn't done until Oracle Forms won't run.

    3. ToddRundgrensUtopia

      Re: At least is isnt oracle or M$

      The OS is from Linus and chums, Redhat adds a few storage bits and some Redhat logos and erm.......

      1. Doctor Syntax Silver badge

        Re: At least is isnt oracle or M$

        "The OS is from Linus and chums"

        Some of those chums (can that number really be called chums) work for RH.

        1. JassMan Silver badge

          Re: At least is isnt oracle or M$

          One well known chum called Greg Kroah-Hartman used to work for IBM once upon a time.

        2. nematoad Silver badge
          Happy

          Re: At least is isnt oracle or M$

          "Some of those chums (can that number really be called chums) work for RH."

          Lennart Poetterring for one.

          The future looks bright!

      2. Uncle Ron

        Re: At least is isnt oracle or M$

        Sorry, you're way off here: The KERNAL is from "Linus and chums." The HUGE rest of the OS is from a community of groups in the thousands around the world.

      3. Orv Silver badge

        Re: At least is isnt oracle or M$

        The OS is from Linus and chums, Redhat adds a few storage bits and some Redhat logos and erm.......

        From a customer standpoint the main thing RedHat adds is formal support. There are still a lot of companies who are uncomfortable deploying an OS that has product support only from StackExchange and web forums. This market is fairly insensitive to price, which is good for a company like RedHat. (Although there has been an exodus of higher education customers as the price has gone up; like Sun did back in the day, they've been squeezing out that market. Two campuses I've worked for have switched wholesale to CentOS.)

    4. Dan 55 Silver badge

      Re: At least is isnt oracle or M$

      So what's next, MS hasn't got its UNIX yet. SUSE or Canonical?

      1. cschneid

        Re: At least is isnt oracle or M$

        > So what's next, MS hasn't got its UNIX yet. SUSE or Canonical?

        Maybe they'll revive Xenix.

      2. Anonymous Coward
        Anonymous Coward

        Re: At least is isnt oracle or M$

        >So what's next, MS hasn't got its UNIX yet. SUSE or Canonical?

        FFS please not SUSE !

        Leap 15 is an excellent release.

      3. Jove Bronze badge

        Re: At least is isnt oracle or M$

        The other possibility is that the take-over will be contested given that there is a risk that IBM shareholders will reject the offer.

        A business such as SoftBank Group may find it a better proposition than say some of it's more recent investments given that RedHat has now been put into play in the market.

      4. Anonymous Coward
        Anonymous Coward

        Re: At least is isnt oracle or M$

        "So what's next, MS hasn't got its UNIX yet. SUSE or Canonical?"

        Now that you can run Linux apps under Windows without the Linux kernel I can't see why they would want to own a distribution. Microsoft can just assist in building userland installs of every key distro and sell it on the security, audit, integration and performance advantages of running it under all under the Windows kernel or hyper-v server.

    5. czarnajama

      Re: At least is isnt oracle or M$

      But Microsoft just bought GitHub ...

    6. Wayland Bronze badge

      Re: At least is isnt oracle or M$

      Yes Oracle would be bad. M$ not so bad.

      1. Tom Paine Silver badge
        Unhappy

        Re: At least is isnt oracle or M$

        It's all bad, all the way down. /o\

    7. The Count
      Happy

      Re: At least is isnt oracle or M$

      They all retired decades ago my child.

    8. Uncle Ron

      Re: At least is isnt oracle or M$

      IBM was already "working on Linux." For decades. With multiple hundreds of full-time Linux developers--more than any other corporate contributor--around the world. And not just on including IBM-centric function into Linux, but on mainstream community projects. There have been lots of Linux people in IBM since the early-90's.

      1. Tom Paine Silver badge

        Re: At least is isnt oracle or M$

        How quickly they forget. (Or perhaps they were still at primary school? (Now I know what all the old men meant, when i was younger, when they kept exclaiming "I feel so OLD!")

        https://www.bloomberg.com/news/articles/2001-12-09/big-blues-big-bet-on-free-software

    9. bombastic bob Silver badge
      Meh

      Re: At least is isnt oracle or M$

      If it were Micro-shaft, we could look forward to the 'Extinguish' part of 'Embrace, Extend, Extinguish, *EX-TER-MIN-ATE*' in a short period of time.

      IBM is likely to put something into RH that they didn't have before: CASH

      They are also likely to REMOVE some of the more irritating 'cultural' things, maybe even systemd and (on its way to becoming, if Ubuntu is any indication) 2D FLATSO gnome 3 [I still have hope!]

      I can also see the possibility of IBM seriously considering a GENERAL USE LINUX DESKTOP to compete with Micro-shaft, even if it's only out of spite over the OS/2 vs Windows thing.

      Too many people assume that "corporation" equals EVIL. You forget that you most likely work FOR a corporation, and that a corporation is PEOPLE. Many of those people have retirement funds with stock portfolios that include those "evil" corporations. Although some of them (Micro-shaft, Google, etc.) may be engaging in questionable and/or outright ILLEGAL and IMMORAL behaviors and policies, it's the people running the place, not the corporation itself, that are *EVIL*.

      I am actually pretty happy IBM is doing this. I see it as a move in the right direction for Linux.

      Imagine what could happen if GOOGLE purchased RH...

      1. StargateSg7 Bronze badge

        Re: At least is isnt oracle or M$

        Damnit BB --- You're STEALING MY lowercase and UPPERCASE musings! How can ANYONE distinguish my writings form yours now??? To illustrate that I not-so-humbly DISAGREE that Microsoft is crappola, I must add in a defence of Microsoft by saying that Active Directory system is the BEST network shag-fest-supportting administration system out there --- BAR NONE !!!!

        Being able to EASILY MAKE AND PUSH a single or multiple Group Policies from a SINGLE central server (or from my super-DUPER remote client station acting as the Enterprise Domain Admin) out to EVERY sub-server and client on a global basis, HAS NO EQUAL in Red Hat, SuSE or ANY OTHER FLAVOUR of Linux!!!! Yes! I'm biased because as a geek-head located but two hours drive from MS headquarters, I do prefer dealing with a more local company...BUT... I do see this acquisition of Red Hat by IBM as a tidal wave of destruction coming soon to the smaller shops who use RH for their internal systems, dev-ops and cloud-like servers.

        IBM will KILL Red Hat in less than five years if they so much interfere with ANY employee functions and coder happiness...THEY WILL ALL LEAVE and there goes all of Red Hat's value and goodwill! IBM has killed so many companies in the 20 years (Lotus, PWC, etc) that I don't see anything good for current RH employees UNLESS you have stock which you can vest as soon as the deal goes through! I say to them RETIRE RICH WHILE YOU CAN !!!!

        The question now, is WHAT COMES AFTER RED HAT?? --- Maybe this is the best news for Microsoft future growth since their own introduction of Active Directory and Azure! It ain't cheap to run an MS server system, but IT SURE IS EASY TO DO SO from an admin's perspective!

        The ONLY THING GOOD about IBM's stock play for RH, is that IBM's Power-9 and Power-10 CPU architectures will FINALLY be having a good look over from the DEV-OPS community. Those CPU's ARE MUCH SUPERIOR to INTEL/AMD. If ONLY MS would put Windows 2016/1019 on those CPU's!!!

      2. IanMoore33

        Re: At least is isnt oracle or M$

        desktop Linux is dead .. a long proven experiment that failed .

        1. Anonymous Coward
          Anonymous Coward

          Re: At least is isnt oracle or M$

          >> desktop Linux is dead .. a long proven experiment that failed .

          It's built into Windows now anyway. You can just install Ubuntu from the Windows Store. You can run your legacy Unix cruft with the ease and convenience of Windows.

          1. Orv Silver badge

            Re: At least is isnt oracle or M$

            I just want to salute you, AC, for a brilliant troll.

  3. The Brave Sir Robin

    Fuck !

    That is all.

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