IBM Closes Acquisition of Red Hat for $34B
So IBM buys Red Hat for $34B, of which $20B are borrowed monies.
The debt is priced at 1.05 percentage points above Treasury yield rate [1] which would be somewhere around 3.5%
which puts interest on bond debt at ~$700m every year.<p>Now consider that Red Hat had a net income of $433m. Even if they reach $500 this year, Big Blue will still be $200m short, every year.<p>At the moment, IBM is trading down at -0.5% on an otherwise slight green Nasdaq.<p>Just from these numbers we can conclude that IBM is seeing some pretty significant synergies in the purchase that the market isn't.<p>[1] <a href="https://www.barrons.com/articles/ibm-bond-sale-red-hat-51557347372" rel="nofollow">https://www.barrons.com/articles/ibm-bond-sale-red-hat-51557...</a>