That's a new 52-week high.
"We expect investor skepticism around the deal given IBM's messaging that it is well underway in its transformation", he said.
The move will aim to establish the hybrid cloud provider solutions that IBM believes will finally offer companies the option to securely move all business applications to the cloud. At 2 p.m. shares were down 2.7 percent to $121.47.
Between them, IBM and Red Hat have contributed more to the open source community than any other organisation. Red Hat's stock is down 28 per cent over the past six months through Friday, according to data compiled by Bloomberg.
The cash deal, IBM's biggest by far, boosts the 107-year-old computer-services giant's credentials overnight in the fast-growing and lucrative cloud market - and gives it much-needed potential for real revenue growth.
Today it has 12,600 workers worldwide in more than 35 countries.
IBM's Rometty said the deal is "a game-changer" for the business.
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By purchasing Red Hat, Rometty said that IBM could become the world's number one hybrid cloud provider by helping businesses migrate to its cloud systems. "IBM will become the world's #1 hybrid cloud provider", said IBM Chairman, President and CEO Ginni Rometty. IBM will purchase all shares of Red Hat for $190 each, a 63% premium over the company's current valuation.
Ignoring its latest set of results in which IBM missed expectations slightly, the company revealed three quarters. "Imagine Red Hat with greater resources to grow into the opportunity ahead of us". If you're a company focused on enterprise customers, having a robust cloud computing solution is essential. Joining forces with IBM offers all of that, years ahead of when we could have achieved it alone. This will likely not impact IBM's stature in the public cloud where the companies have a presence, but not almost as much as the private cloud. "This combination not only represents a truly fantastic outcome for our shareholders, but it is a catalyst for Red Hat to drive powerfully into the future". IBM operates one of its largest corporate campuses in Research Triangle Park and employs several thousand people across the state. Both Rometty and Whitehurst emphasized that Red Hat will remain a stand-alone business unit.
Red Hat had been growing on its own, with strong momentum in the cloud for its OpenShift Kubernetes container orchestration platform.
"Since the day we made a decision to bring open source to the enterprise, our mission has remained unchanged". IBM has always been a partner with Red Hat, even porting Red Hat Enterprise Linux (RHEL) to its mainframe platforms. IBM is acquiring Red Hat for our wonderful people and our incredibly special culture and approach to making better software.
"We will scale what Red Hat has deeply into many more enterprises than they're able to get to".
"Most companies today are only 20% along their cloud journey, renting compute power to cut costs", she said. This is the next chapter of the cloud. Whitehurst also will join IBM's senior management team and report to Rometty. The deal is described in the companies' press release as an evolution of the long-standing partnership.