RALEIGH – The federal government has signed off on the $34 billion acquisition of Raleigh-based Red Hat by IBM, according to a regulatory filing.
IBM disclosed early Monday that the Department of Justice told Big Blue of the approval on Friday.
“On May 3, 2019, IBM was informed that the U.S. Department of Justice has concluded its review of IBM’s proposed acquisition of Red Hat without remedies or conditions and received a notice of early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,” IBM said in the filing with the SEC.
“IBM and Red Hat continue to work with competition authorities in other jurisdictions, and IBM continues to expect the transaction to close in the second half of 2019.”
The deal was announced last October.
Changing of the colors: Red Hat tower dons a white fedora but keeps vivid red band
IBM shares traded down slightly on the news while Red Hat shares ticked upward in pre-market trading.
Interestingly, IBM Chair and CEO Ginni Rometty is scheduled to give the commencement speech at NC State on Saturday.
In its earnings conference call in April, IBM stressed the impact the deal will have on Big Blue, especially in cloud computing.
Jim Kavanaugh, IBM’s Senior Vice President and Chief Financial Officer, declared:
“First and foremost we’re very excited about the potential combination of IBM and Red Hat as we talked about I think in a handful of other areas around us accelerating the leadership in a $1 trillion hybrid cloud market. We believe this differentiates us as we move forward and we can’t be more excited when you look at Red Hat performance, exiting fiscal year 19 and what they reported and shared publicly, accelerating revenue up in the high teens, there backlog is up 22% if I remember correctly, strong margin contribution and they are delivering very strong cash flow.”
Reporters surfaced in March that the deal was facing obstacles in securing federal approval. That was picture emerging from a variety of media reports in recent days, including comments from a senior IBM executive at a meeting in Europe where he said IBM would “potentially” acquired the Raleigh-based open source services and software giant is based.
However, a spokesperson for IBM said the deal is still progressing,
“Your story is wrong,” said Douglas Shelton. “As IBM has announced previously, we expect the deal to close in the second half of 2019.”
Last week, Red Hat unveiled a new corporate logo as well as a white fedora and Red Hat in white lettering across a red band atop Red Hat’s office tower in downtown Raleigh.
Both companies have said that Red Hat will operate as a separate company under IBM ownership with Red Hat CEO Jim Whitehurst remaining in charge.
Note: This story has been corrected to reflect the value of the deal to $34 billion.
Here’s Red Hat’s new logo – why change? ‘A much different company’ today
