IBM has announced that it will buy Red Hat, in a deal worth $34bn.
The acquisition will give IBM a boost in the cloud space, where it has lagged behind rivals and newer tech companies.
The company said that the deal will allow IBM to help customers in adopting hybrid, multi-cloud environments, and to accelerate cloud adoption. The pair already have a long history of collaboration in the open source space.
IBM will pay $190 per share in cash for Red Hat, a 63 percent premium to Friday's closing share price. The deal is IBM's largest acquisition to date.
Ginni Rometty, IBM Chairman, President and CEO said in a company statement: "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.
"Most companies today are only 20% along their cloud journey, renting compute power to cut costs," she said. "The next 80% 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."
"Open source is the default choice for modern IT solutions, and I'm incredibly proud of the role Red Hat has played in making that a reality in the enterprise," said Jim Whitehurst, President and CEO, Red Hat. "Joining forces with IBM will provide us with a greater level of scale, resources and capabilities to accelerate the impact of open source as the basis for digital transformation and bring Red Hat to an even wider audience - all while preserving our unique culture and unwavering commitment to open source innovation."