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IBM will pay $33 billion for Red Hat

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IBM will pay $33 billion for Red Hat
October 29
09:00 2018

IBM, computer equipment provider, intends to buy Red Hat for $ 33 billion. For both companies, this will be the biggest deal over their presence in the market.

IBM will pay almost $ 200 per share, which is 1.5 times higher than the current market price. The company management has already approved the deal. It will be done in 2019.

Ginni Rometty, CEO of IBM, noted that that transaction was extremely important for the company development. “Red Hat will give us the opportunity to become leaders in this market,” she explains.

When IBM focused on developing AI and cloud services, its revenue began to fall. This trend had persisted for 6 years. After that there was some growth, but the revenue fell again in the last quarter.

The company’s capitalization has been falling for a year. IBM has lost almost 20% in value. As a result of recent trading, the stock price has fallen by 6%.

According to S & P forecasts, this year IBM’s revenue will reach $ 80 billion, while earnings should be equal to $ 14 per share. Until 2011, when Gianni Rometty became the head of the company, its annual profit was equal to 107 billion US dollars (13.5 US dollars per share).

 

The material was prepared with the participation of Anjela Chromova,
a leading analyst of the brokerage company CT Trade

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