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IBM “set to secure” EU approval for $34bn Red Hat acquisition

IBM is set to complete the biggest software acquisition in history as European regulators prepare to sign off on its $34bn bid for Red Hat, Reuters has reported. Sources told the news agency that the European Commission plans to unconditionally approve the deal ahead of the 27 June deadline.

IBM claims the takeover would “completely change the cloud landscape” and make it the world’s “number one hybrid cloud provider”. It is facing fierce competition in the cloud computing market from providers such as Amazon Web Services, Microsoft and Google, and wants to grow its software subscription offering.

When the deal was announced in October, Suman Nambiar, head of AI practice at digital transformation consultancy Mindtree, said “the price IBM is paying ” reflects “the urgency they feel to catch up to Amazon Web Services, Microsoft Azure and others”.

The acquisition, which has already been approved by American regulators, is the third biggest in the history of US tech, after Dell and EMC’s merger in 2016 and JDS Uniphase’s acquisition of SDL in 2000.

Announcing the deal in October, IBM’s chief executive Ginni Rometty said: “Most companies today are only 20 percent along their cloud journey, renting compute power to cut costs. The next 80 percent 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.”