EU approves IBM's $34 billion acquisition of Red Hat

European Commission concludes that IBM's proposed takeover of Red Hat posed no competition concerns

The European Commission has unconditionally approved IBM's $34 billion takeover of open-source software maker Red Hat.

In a statement, the European Commission said that following an investigation, it concluded that the proposed deal "would raise no competition concerns".

Since IBM doesn't stand among the top two companies in the cloud computing market, and isn't dominant in any sector in which Red Hat is also present, there was no reason for regulators to believe that the merger would raise competition concerns.

"During its investigation, the Commission assessed the impact of the proposed transaction on the markets for middleware and system infrastructure software, where the activities of IBM and Red Hat overlap," the Commission said in its statement.

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"The Commission found that the merged entity would continue to face significant competition from other players in all potential markets."

The antitrust agency also said that it "took note" of the argument that the merger could actually increase competition in the market.

The deal between IBM and Red Hat was announced last October. EU's approval has finally cleared a big hurdle for the IBM's biggest acquisition to date.

The Commission found that the merged entity would continue to face significant competition from other players in all potential markets

The EU's antitrust agency was the last major authority to give approval for the IBM-Red Hat deal. The deal was cleared last month in the US.

IBM believes the buyout of Red Hat would enable it to expand its subscription-based software offerings and to also address the declining demand for its mainframe servers as well as the software.

IBM - once known primarily for its computer hardware - has changed its priorities in the past years. The company is focusing more on cloud computing now, like Microsoft and Amazon, to remain viable in the market and to create new growth opportunities for itself.

Following the merger, Red Hat will become a unit of IBM's Hybrid Cloud division. It will be an all-cash deal and IBM will pay Red Hat stockholders $190 per share, according to CNBC.

Red Hat was founded in 1993 to distribute Linux, and Unix software. However, the company took advantage of the boom in popularity of Linux in the late 1990s and early 2000s by focusing on the enterprise.

Based in Raleigh, North Carolina, it has a workforce of around 12,000 people, and a presence in 35 countries. Today, Red Hat distributes and supports Red Hat Enterprise Linux, as well as other enterprise and data centre software.

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