Oct 28 (Reuters) - IBM Corp is nearing an agreement to acquire software company Red Hat Inc in a deal that could exceed $30 billion and help diversify its business away from technology hardware and consulting, people familiar with the matter said on Sunday. The acquisition, IBM’s biggest so far, will provide open approach to Cloud, featuring unprecedented security and portability across multiple clouds, a joint statement said late Sunday. It underscores IBM chief executive Ginni Rometty’s efforts to expand the company’s subscription-based software offerings, as it faces slowing software sales and waning demand for mainframe servers. IBM’s and Red Hat’s partnership has spanned 20 years, with IBM serving as an early supporter of Linux, collaborating with Red Hat to help develop and grow enterprise-grade Linux and more recently to bring enterprise Kubernetes and hybrid cloud solutions to customers. IBM and Red Hat also will continue to build and enhance Red Hat partnerships, including those with major cloud providers, such as Amazon Web Services, Microsoft Azure, Google Cloud, Alibaba and more, in addition to the IBM Cloud. IBM will acquire all of the issued and outstanding common shares of Red Hat for $190 per share in cash, representing a total enterprise value of approximately $34 billion. Founded in 1993, Red Hat specializes in Linux operating systems, the most popular type of open-source software, which was developed as an alternative to proprietary software made by Microsoft Corp.

Headquartered in Raleigh, North Carolina, Red Hat charges fees to its corporate customers for custom features, maintenance and technical support, offering IBM a lucrative source of subscription revenue. The companies called the deal, which still needs approval from shareholders and regulators, the “most significant tech acquisition of 2018.” The deal is expected to close in the second half of 2019. Upon closing of the acquisition, Red Hat will join IBM’s Hybrid Cloud team as a distinct unit, preserving the independence and neutrality of Red Hat’s open source development heritage and commitment, current product portfolio and go-to-market strategy, and unique development culture.
American computer company IBM announces plans to acquire American software company Red Hat for US$34 billion.