Wednesday, April 22, 2009

Is The Time Right For IBM To Acquire Red Hat?

. Wednesday, April 22, 2009

By stockOzone team

Shares of Red Hat Inc. (NYSE: RHT) surged up on Wednesday on speculation that the Raleigh, North Carolina-based Linux distribution vendor is acquisition target of software giant IBM (NYSE: IBM). In the options market too, heavy call buying activity was witnessed, indicating that traders are betting upon a potential acquisition of the company.
Takeover speculation about a potential acquisition of Red Hat Inc. has surfaced many times in the past without coming to fruition. However, unlike the past, it is IBM and not Oracle Inc. (NASDAQ: ORCL) which is seen as a possible acquiree.

A couple of days back, Oracle Corp. (NASDAQ: ORCL) announced that it has agreed to buy Sun Microsystems Inc. (NASDAQ: JAVA) for $9.50 a share in a deal valued at $7.4 billion, just days after a reported deal by IBM (NYSE: IBM) collapsed. It is being said that Oracle's acquisition of Sun may force IBM to take a more serious look at Red Hat.

Founded in 1995, Red Hat, Inc. is the world's leading provider of open source solutions, and a major Linux distribution vendor. The company has a market capitalization of $3.11 billion.

Shares of the company rose 80 cents or 4.55% to $18.37.

Disclosure: Author does not own any of the stocks discussed here.

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