The Ripple Effects of IBM's Big Bet on Red Hat By J.R. Simmons

In late October, IBM announced its plan to acquire open source cloud provider Red Hat in a deal valued at approximately $34 billion cash, which represents roughly one-third of IBM’s market value and a 60% premium over Red Hat’s value. You know it is a big deal when the news reports on the total bid price rounded off to the nearest billion. But unlike many acquisitions featuring common-technology competitors, this one has produced more than one eyebrow-raising moment across the industry.

 
Financial analysts can focus on the merits of the price, the market opportunity, and the impact on stock prices. But it’s just as interesting to dig into the inter-company operating relationships that could be impacted by the proposed deal.
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