IBM, Red Hat Deal Gets Go-Ahead From Brussels

Removing a hurdle for a large acquisition, Brussels has reportedly approved the $34 billion takeover of open-source software firm Red Hat by IBM. Antitrust officials in the European Union had considered concerns that the move could degrade service to competing products, or could reduce the ability to influence Red Hat development projects to cut down on competition with its own offerings, the Financial Times reported.

The Commission found that the arrangement deal, which was agreed to last year, “would raise no competition concerns.” It also “took note” that the deal could, in fact, stir up competition. The firms hope the arrangement will accelerate the move to the cloud for corporate clients, while providing a boost to the revenues of Big Blue.

The news comes after it was reported in May that IBM had bid $34 billion for Red Hat, with the deal subject to approval by EU antitrust regulators. At the time, it was noted that the antitrust body would make the decision by June 27. The U.S. regulatory body, it was noted then, had already cleared the deal without concessions.

The deal, which was said to be the biggest for IBM, is intended to help the company grow its footprint into subscription-based software. On May 21, IBM said it had asked for approval the day before. Red Hat, which launched in 1993, specializes in Linux operating systems, an open-source software. At the time, it was reported that the Commission could choose to clear the deal with conditions, clear it without conditions or open an investigation.

IBM has recently been embracing new technologies. On its first-quarter earnings call, blockchain and artificial intelligence were repeatedly discussed, per previous reports.