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International Business Machines (IBM) announced it has officially closed its $34 billion acquisition of software company Red Hat (RHT) in what represents the largest acquisition in the company's more than a century old history. 

IBM will pay $190 per share in cash for Red Hat, a 63% premium over the stock's price before the merger was announced. Red Hat shares were up 0.69% to $189 in premarket trading Tuesday.

"Businesses are starting the next chapter of their digital reinventions, modernizing infrastructure and moving mission-critical workloads across private clouds and multiple clouds from multiple vendors," said CEO Ginni Rometty. "IBM and Red Hat are uniquely suited to meet these needs. As the leading hybrid cloud provider, we will help clients forge the technology foundations of their business for decades to come."

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IBM said that the the two companies will "accelerate innovation" by offering a next-generation hybrid multicloud platform. Red Hat will continue to be led by Jim Whitehurst and the company's current management team. 

IBM's cloud revenue has grown from 4% of total revenue to 25% of total revenue. IBM's cloud revenue grew to $19 billion through the 12-month period through the first quarter of the year. Red Hat's fiscal 2019 revenue totaled $3.4 billion. 

IBM shares were flat at $140.57 Tuesday morning.