California investors who own shares of Red Hat were invited to vote on a proposed merger with IBM. Roughly 141 million shareholders voted to approve the $34 billion proposal. The proposed deal is for $190 per share, which was about 60 percent more than what shares were valued at when it was announced in October 2018. A regulatory filing revealed that the shares were worth about $175 when the vote was taken.
Red Hat is based in Raleigh, North Carolina, and has about 2,000 employees in that area. IBM says that it would keep the company’s headquarters there after the deal is completed. Prior to the shareholder vote, the proposed merger had been approved by the company’s board. The deal is expected to close in 2019 after receiving required regulatory approval.
There may be many issues to consider when two companies come together. For instance, it may be necessary to ensure that the acquired company offers something of value that the acquiring company can’t keeping growing without. That asset may be a product, service or intellectual property that the acquiring company doesn’t have. It is also important to do due diligence to ensure that the business is profitable or could become profitable after the merger or acquisition is complete.
The deal should be structured in a way that makes sense for both companies as well as their shareholders. Otherwise, it may not be possible to get shareholders to approve the deal. It should also be structured in a way that conforms to state and federal law. Doing so may increase the chances that it receives regulatory approval in a timely manner. An attorney may review a deal to determine if it’s structure will help a company meet its business goals.