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Red Hat stock up 47% after $34B US takeover by IBM

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Shares of Red Hat skyrocketed 47 per cent at the opening of trading in New York Monday after IBM, in the biggest acquisition of its 100-year history, acquired the software company.

The market was buoyed by the $34-billion US deal, with tech stocks moving higher, partly on speculation there may be more bidders for the software company, or that other big players will be looking for targets to position themselves in cloud computing.

Red Hat specializes in Linux operating systems, the most popular type of open-source software, providing what it calls the hybrid cloud, in which companies run some of their software in their own data centres and other elements of it in data centres run by IBM, Amazon Web Services or Google Cloud, among others.

The company was founded by Bob Young, the Canadian entrepreneur who also owns the Hamilton Tiger-Cats.

The increasing use of cloud services from multiple providers was the driving force behind the deal for IBM.

‘Game-changer’ for IBM

“The acquisition of Red Hat is a game-changer … IBM will become the world’s No. 1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses,” IBM CEO Virginia Rometty said in a statement.

The deal bolsters Rometty’s efforts to expand the company’s subscription-based software offerings, as it faces slowing software sales and waning demand for mainframe servers.

The $34-billion stock deal translates to $190 per Red Hat share — a 63 per cent premium to the closing price Friday for the Raleigh, North Carolina company.

Red Hat Inc.’s stock soared almost 50 per cent in early trading to $172. IBM stock slipped slightly.

Jim Whitehurst, the CEO of Red Hat, said the use of multiple clouds has been an advantage for Red Hat.

Red Hat’s winning strategy

Cloud providers such as Amazon often offer a house-made version of the Linux operating system for free or at little cost. But that version of Linux is available only on Amazon, and if the business wants to run software on another cloud they would have to ensure it works with a different version of Linux there.

Red Hat offers a standard version of Linux that runs on commonly available clouds as well as a business’s own data centres, and Whitehurst said Red Hat customers were increasingly running its operating system on public clouds.

“We are growing faster on the public clouds than the public clouds are growing,” Whitehurst said in an interview. “Yeah, you pay us a little extra versus a free cloud offering, but you get the benefit of a standard operating environment.”

In buying Red Hat, IBM will have assembled a cloud that includes physical servers, its own operating system and applications like human resources software.

But the combined entity will also sell software that runs on its customers own hardware and other clouds. That will put it in direct competition with firms like Microsoft, which has a similar mix of software and cloud services.

The deal requires the approval of Red Hat shareholders as well as U.S. regulators. It is targeted to close in the latter half of 2019, but there is a good chance that others may wish to make a counterbid.

“We have long-stated that Red Hat is a strategic asset and while we are not aware of any merger and acquisition discussions or negotiations, we would not be surprised if a hyperscale cloud vendor such as Google, Amazon, Microsoft, or Oracle make a competing bid given Red Hat’s strategic position within on-premise datacentres (over 100K customers),” wrote Stifel’s Brad Reback.

With files from the Associated Press

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Real Estate

7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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