Software Stocks Waver Following IBM's Acquisition of Red Hat
The software sector got a boost Monday from International Business Machines Corp.'s (IBM) - Get Reportpurchase of Red Hat Inc. (RHT) - Get Report for $34 billion, or $190 a share. Red Hat shares jumped more than 40% in afternoon trading on Monday and other software stocks rose as the premium valuation for Red Hat makes them more attractive.
Analysts from Stifel suggested that Red Hat could get a competing offer from Alphabet Inc. (GOOGL) - Get Report , Amazon Inc. (AMZN) - Get Report or Microsoft Corp. (MSFT) - Get Report , whose businesses would be directly impacted from IBM's acquisition of Red Hat. IBM tumbled more than 3% as investors bristled at the sale price for the open source software company.
"Google, Amazon, and Microsoft (and potentially Oracle) have the strategic motivations and financial resources to consummate such a transaction and would not be surprised if we were to see one of them make a competing bid," Stifel's note stated.
Here's how other competing software companies did Monday.
Salesforce.com Inc. (CRM) - Get Report declined 3.3%.
VMware Inc. (VMW) - Get Report dropped 1.7%.
Adobe Inc. (ADBE) - Get Report fell 2.5%.
Splunk Inc. (SPLK) - Get Report jumped 3.6%.
ServiceNow Inc. (NOW) - Get Report fell 1.6%.
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