International Business Machines Corp IBM just paid $34 billion for Redhat Inc RHT , three-times IBM’s cash pile. It’s also a 60% premium over Redhat’s Friday closing price. This comes in the middle of a nasty tech devaluation, in which tech stocks – not just FAANG’s have been sold off heavily. IBM may have had a chance to buy Redhat’s dip (it was at $133 to begin October, and closed at $116 Friday). Redhat investors are loving the news – and why not. Cloud computing is incredibly competitive, and IBM is offering a huge amount of cash to Redhat. The stock is up almost 50% in pre-market trading Monday. IBM investors? Not so much. IBM shares are down almost 5%. Read the full analysis in my newsletter here.
TheStreet’s Kevin Curran writes that the deal increases the chase for cloud market share, as IBM is the RealMoney stock of the day.
Elsewhere, look for a bounce in stocks. The last few days of October are historically good for stocks, according to data LPL financial shined a light on. October has been a horrid month for stocks this year in particular. Pronouncing the down move in stocks this month are fears of an economic slowdown, as companies have reported strong earnings and guidance, which the market has largely shrugged off.
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