IBM and Red Hat – A Match Made for Hybrid Cloud
That barn buster acquisitions are more common in IT than other industries says as much about the dynamism of the tech sector as it does about specific business circumstances. The fact is that most IT vendors are constantly on the hunt for a competitive edge, and in an industry that changes as rapidly as tech, acquiring external assets often delivers a bigger bang for the buck faster than internal development efforts.
That said, simply buying another company is anything but a slam dunk, even for large, well-funded deals. Critical issues can aid acquisitions from the get-go or contribute to eventual massive failures, like HP’s costly acquisitions of Compaq and EDS. The best deals are those in which the involved companies are well-aligned technologically, strategically and culturally.
IBM’s plan to acquire Linux and open source leader Red Hat for $190 per share ($34B in total value) qualifies as just that sort of plan. Let’s consider what makes a successful IT acquisition and why IBM and Red Hat seem likely to make their pairing work.
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NOTE: This column was originally published in the Pund-IT Review.