IBM’s planned purchase of Red Hat for $34 billion would be one of the largest tech acquisitions of all time.
Of course the distinction of what makes a technology company in the 21st century can be difficult to parse. The merger between Time Warner and AOL is commonly referred to as a media merger despite AOL’s history as an internet service provider and tech company.
And of course nobody at headquarters should be feeling too comfortable just because their company can pull off a big acquisition. JDS Uniphase, in the second spot on the ranking below, paid $41 billion to acquire its fiber-optic rival SDL before the dot-com bust; now the company is a shell of its former self. (While AOL Time Warner isn’t on this list, it didn’t fare much better as a combined company.)
The investment in Red Hat may open a new chapter for IBM, though, perhaps even supplanting the company’s frequently hyped and increasingly scrutinized Watson AI services as its next big area of business potential. It’s obviously too soon to say. What we know for sure is that, if completed at the announced purchase price, IBM’s purchase of Red Hat would be the largest acquisition ever for a software company, dwarfing Microsoft’s 2016 LinkedIn acquisition and Facebook’s takeover of WhatsApp in 2014..
The deal is especially notable because Red Hat distributes open-source software, meaning it’s available to be replicated and used for free on the internet. Red Hat does have revenue, though, which it earns by tailoring its software for specific companies and supporting its implementation.