IBM has agreed to buy the software maker Red Hat Inc. for $33.4 billion, the computer-services giant’s biggest-ever acquisition, to jumpstart its efforts to find growth in new technologies.
International Business Machines Corp. will pay $190 a share in cash for Raleigh, N.C.-based Red Hat, a statement from the companies said Sunday. That’s a 63 percent premium over Red Hat’s closing stock price of $116.68 per share on Friday.
“The acquisition of Red Hat is a game-changer. It changes everything about the cloud [compouting] market,” Ginni Rometty, IBM’s chairman and chief executive, said in the statement.
Rometty has been trying for years to steer the 107-year-old technology giant toward more modern businesses, such as those involving the cloud, artificial intelligence, and security software.
With its third-quarter results, IBM disappointed investors, who were seeking more progress in those areas after six years of declining sales that had only started to show gains earlier this year. The improvements had been coming largely from IBM’s legacy mainframe computer business, rather than form its so-called strategic imperatives.
In June 2017, Red Hat opened a new global executive briefing center in the Fort Point section of South Boston. There, clients can touch wall-size video screens to learn more about their Red Hat projects, or about software development work the company has done for others.
Red Hat is leasing 40,000 square feet at 300 A St., a space that also used to house engineering work and an innovation lab. The company has said that it hopes to soon have about 200 employees working there.
Red Hat also has corporate facilities in Westford. The Westford campus, more than four times the size of the Boston space, is the company’s base of operations for its products and technology work.
Red Hat opened in Westford about 16 years ago, in part to draw people who had worked for suburban computer companies like Digital Equipment Corp. and Data General. The urban location will help Red Hat chase attract younger workers, the company said last year.
Neither company will cut jobs after the deal, Rometty said. “This is an acquisition for revenue growth; this is not for cost synergies.”
Purchasing Red Hat purchase will give IBM an immediate cloud revenue boost as well as a suite of proven software products to sell through its global salesforce.
“We will scale what Red Hat has deeply into many more enterprises than they’re able to get to,” Rometty said Sunday.
Revenue at Red Hat, which sells software and services based on the open source Linux operating system, is expected to top $3 billion for the first time this year as the company’s Red Hat Enterprise Linux product attracts business from large customers. Last quarter, the company reported a record 11 contracts valued at over $5 million each and 73 over $1 million, according to a note from a JMP Securities analyst, Greg McDowell.
At the same time, sales last quarter missed analysts’ expectations, and the forecast for the current quarter fell short, fueling concerns that Red Hat may be losing deals to rivals and growth may be slowing. The company said at the time that it believed the slowdown had “bottomed out.”
Red Hat’s stock was down 28 percent over the six months through Friday, according to data compiled by Bloomberg.
IBM, with a market valuation of $114 billion, has seen revenue decline by almost a quarter since Rometty took over as CEO in 2012. Some of that has been from divestitures, but most of it is from declining sales in existing hardware, software, and services offerings. The company has struggled to compete with younger technology companies.
Rometty said IBM “paid a very fair price. This is a premium company. If you look underneath, this is strong revenue growth, strong profit, strong free cash flow.”
Red Hat makes IBM “a credible player in cloud now — both private and hybrid cloud,” Bloomberg Intelligence analyst Anurag Rana said. “This gives them an asset that looks forward and not backward.”
Goldman Sachs Group and JPMorgan Chase & Co. advised IBM on the deal and provided financing.
“Knowing first-hand how important open, hybrid cloud technologies are to helping businesses unlock value, we see the power of bringing these two companies together,” JPMorgan CEO Jamie Dimon said in an e-mail.
Material from the Globe’s archives was included in this report.