In a joint-statement issued by IBM and Red Hat on Sunday, the two companies announced they have reached an agreement in terms by which IBM will acquire all of Red Hat’s outstanding common shares at $190 per share. The deal is said to be worth approximately $34 billion, making it one of the largest tech acquisitions of all-time.

Deal Marks IBM’s Return to Form

The move is a return to form for IBM in the enterprise services space. After nearly a decade experimenting with AI and blockchain technologies to moderate success, the acquisition of Red Hat marks a shift in the company’s trajectory back toward cloud computing and the Linux ecosystem. To that end, Red Hat is a true force in the Linux ecosystem and one of the largest open source enterprise software developers there is. 

Moving Further Into the Cloud

The move is seen as a further move by IBM into the cloud space. According to IBM president and CEO Ginni Rometty, “The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.”

An Enthusiastic IBM CEO

Rometty also asserts, “Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs,” she said. “The next 80 percent is about unlocking real business value and driving growth. This is the next chapter of the cloud. It requires shifting business applications to hybrid cloud, extracting more data and optimizing every part of the business, from supply chains to sales.”

Solid Financials in the Space

According to company CFO Jim Kavanaugh IBM’s cloud unit brought in over $19 billion so far this year, up more than 20% from the same time last year. The $190 per share price also marks a 63% premium from Friday’s $116.68 per share closing price for Red Hat. Last year, Red Hat generated more than $3 billion in revenue but is said to have a plan to expand that revenue to $5 billion.

If approved by shareholders and regulators the deal is expected to clear in the latter half of 2019.