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IBM to acquire Red Hat for $34 billion

Photo: Alvin Chan/SOPA Images/LightRocket via Getty Images

IBM announced Sunday it would acquire Linux specialist Red Hat in a deal valued at $34 billion in cash and debt. That works out to $190 per share, a hefty premium to where the software maker has been trading, and the largest software acquisition of all-time.

Our thought bubble, via Axios' Kim Hart: IBM has been shifting for years away from mainframes and servers to selling software and services that bring recurring revenue. Red Hat, which charges corporate clients for custom-built Linux offerings, fits into that strategy.

The move comes as others are also doubling down on Linux, including longtime rival Microsoft which just completed its $7.5 billion GitHub purchase and recently joined an effort that helps protect open source by sharing patent rights.

The details:

  • The deal is expected to close in the second half of 2019
  • Red Hat will become a standalone unit in IBM's cloud unit and keep its existing leaders and location.
  • IBM said it should add to free cash flow and profit margins within 12 months

What they're saying:

  • N.Y. Times tech reporter Steve Lohr: "IBM makes a big move to attract software developers and position itself as the "Switzerland" of the cloud world."
  • Tech journalist Simon Le Gros Bisson: "The only upside I can see to an IBM/RHAT deal is if IBM lets Red Hat run it like a reverse takeover. Otherwise it's going to be "How many Global Services consultants do you want with that OpenShift install?""
  • Red Hat engineer Dan Sneddon: "I’m having trouble picking my jaw up off the floor. This probably won’t be a bad thing in the long run, but calling this a surprise is an understatement."

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Moderna to file for FDA emergency use authorization for COVID vaccine

Photo illustration by STR/NurPhoto via Getty Images

Moderna announced that it plans to file with the FDA Monday for an emergency use authorization for its coronavirus vaccine, which the company said has an efficacy rate of 94.1%.

Why it matters: Moderna will become the second company to file for a vaccine EUA after Pfizer did the same earlier this month, potentially paving the way for the U.S. to have two COVID-19 vaccines in distribution by the end of the year.

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Scott Rosenberg
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The social media addiction bubble

Illustration: Annelise Capossela/Axios

Right now, everyone from Senate leaders to the makers of Netflix's popular "Social Dilemma" is promoting the idea that Facebook is addictive.

Yes, but: Human beings have raised fears about the addictive nature of every new media technology since the 18th century brought us the novel, yet the species has always seemed to recover its balance once the initial infatuation wears off.

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Marisa Fernandez
2 hours ago - Health

Young people's next big COVID test

Illustration: Eniola Odetunde/Axios

Young, healthy people will be at the back of the line for coronavirus vaccines, and they'll have to maintain their sense of urgency as they wait their turn — otherwise, vaccinations won't be as effective in bringing the pandemic to a close.

The big picture: "It’s great young people are anticipating the vaccine," said Jewel Mullen, associate dean for health equity at the University of Texas. But the prospect of that enthusiasm waning is "a cause for concern," she said.

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