IBM Acquired Red Hat For $34 Billion, Founder Refused to Take Credit For it
Who would have thought that this ordinary open-source software distributor would become a billion dollar company after being acquired by one of the biggest companies in the industry? Last September, the International Business Machines Corporation or the IBM, officially acquired Red Hat for a $34 billion deal. According to the statement released by IBM, they bought all the shares of Red Hat for $190 each. Because of this acquisition, Red Hat is now a unit of IBM’s Hybrid Cloud division that led to their CEO Jim Whitehurst becoming IBM’s senior management team.
This recent acquisition by IBM is considered as the biggest deal the company has ever made and is also the third-largest on American history, just behind the $67 billion deal between Dell and EMC back and 2016, and the $41 billion deal between JDS Uniphase and SDL in 2000. It has been years since Red Hat had made themselves available in the market, but they never had a serious negotiation aside from IBM.
Red Hat Got Snubbed By Potential Buyers
According to some reports, Red Hat was up for sale for such a long time and a lot of potential buyers snubbed them and did not take the opportunity. Reports also said that one of those potential buyers is Google, but they decided to pass on the opportunity to acquire the open source software solutions company. With the $34 billion acquisition, Red Hat makes one-third of IBM’s most recent market cap. It is believed that this massive payout is a major strategic move by IBM since it would lead to them getting into the IT industry that is still growing in such a quick pace.
With Red Hat, IBM could get their hands on the biggest portfolio of open source technology the world has ever seen, they could also have their hybrid cloud platform transformed into a more innovative one, and most of all it could bring IBM a massive opportunity to get into the open source developer community. Experts believe that these are the major points that IBM saw and other companies failed to see.
The IBM spokesperson admitted that their company has been investing in high-value segments of the IT industry and Red Hat will definitely lead them to it that could be a total game-changer for the cloud industry.
From Nothing to Everything
Red Hat may be snubbed by some of the biggest companies, but it no longer matters since they have been acquired by a giant one. Turns out that before this all happened, its co-founder was at rock bottom. It was in 1993 when Bob Young was still unemployed before starting the company, and despite the fact that he already stepped down as CEO when Red Hat came public in 1999, he is still at his A-game at the age of 64.
In an interview with CNBC, the Red Hat founder revealed that he didn’t have anything back in the day and considered himself as an entrepreneurial businessman. For someone who has three kids and a big mortgage, having that kind of career can be tough. His experience on the computer business gave him the opportunity to get into the software sales market. Young said that he had a background in source codes as well as the license to modify it, so he used it as a stepping stone to take control of things.
Together with a software engineer named Marc Ewing, they created Red Hat, and by 1998 it started to generate sales more than $5 million every single year and became doubled as years went by. Young decided to step down and when he found out that IBM acquired the company, he immediately said that it has nothing to do with him.
Young believed that he would take some credit since he was one of the first key people of the company, but the real credit must go to those who executed everything since he said they are smarter than him.
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