IBM closes its $34 billion acquisition of Red Hat

IBM closes its $34 billion acquisition of Red Hat

Ginni Rometty, CEO of IBM on Mad Money to discuss IBM's acquisition of Redhat.

Adam Jeffery | CNBC

closed its $34 billion acquisition of , the companies announced Tuesday.

Shares of IBM were flat during premarket trading, while Red Hat shares were halted. 

The deal was , when the companies said IBM would buy all shares in Red Hat at $190 each in cash.

The acquisition of Red Hat, an open source, enterprise software maker, marks the close of IBM's largest deal ever. It's one of the largest in U.S. tech history. Excluding the , it follows the $67 billion merger between and EMC in 2016 and JDS Uniphase's $41 billion acquisition of optical-component supplier SDL in 2000.

Under the deal, Red Hat will now be a unit of IBM's Hybrid Cloud division, according to the original announcement. The companies said Red Hat's CEO Jim Whitehurst would join IBM's senior management team and report to CEO Ginni Rometty.

IBM previously said it hopes its acquisition of Red Hat will help it do more work in the cloud, one of its four key growth drivers, which also include social, mobile and analytics. The company lags behind and in the cloud infrastructure business. IBM has seen of declining year over year revenue. But some analysts are hopeful of the Red Hat deal's opportunity to bring in new business.

In an April note, Nomura Instinet analysts led by Jeffrey Kvaal  said, "OpenShift [a Red Hat product] should help IBM win new customers and new workloads as enterprises begin to usher mission-critical applications from on-premise to public or private clouds."

Goldman Sachs, J.P. Morgan and Lazard advised on the deal. Morgan Stanley and Guggenheim advised Red Hat.

This story is developing.

-CNBC's Jordan Novet, Alex Sherman and Lora Kolodny contributed to this report.

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