IBM nears deal to acquire cyber security company Red Hat: sources

FILE PHOTO: A logo of IBM is seen at the Mobile World Congress in Barcelona, Spain February 28, 2018. REUTERS/Yves Herman/File Photo GLOBAL BUSINESS WEEK AHEAD

(Reuters) – IBM Corp (IBM.N) is nearing deal to acquire software company Red Hat Inc (RHT.N) in a deal that could exceed $30 billion and allow it to expand its cyber security offerings, people familiar with the matter said on Sunday.

The deal would be by far IBM’s biggest acquisition. The move underscores IBM CEO Ginni Rometty’s efforts to expand the company’s subscription-based technology offerings and diversify it business beyond software sales and mainframe servers, which have faced sluggish growth.

An agreement between IBM and Red Hat is expected to be announced later on Sunday, the sources said, asking not to be identified because the matter is confidential. IBM and Red Hat did not immediately respond to requests for comment.

Red Hat specializes in Linux operating systems, the most popular type of open-source software, which was developed as an alternative to proprietary software made by Microsoft Corp (MSFT.O).

Red Hat charges fees to its corporate customers for custom features, maintenance and technical support. It has a market capitalization of $20.5 billion. IBM has a market capitalization of $114 billion.

Reporting by Liana B. Baker and Greg Roumeliotis in New York; Editing by Cynthia Osterman