RALEIGH – As the countdown for regulatory approval of IBM's 34 billion. Dollars acquisition of Raleigh-based Red Hat remains many questions unanswered, what will be the true consequences, not what the company's managers have said.
Will Red Hat (NYSE: RHT) really be separate from IBM (NYSE "IBM)?
Will there be terminations as in most business associations, as companies look for so-called" synergies "like human resources, economic and back -office support to reduce costs
Will Red Hat directors aboard when the provisions of the retention agreement to receive limited stock options expire?
Veteran tech lawyer Jim Verdonik On average, trading multiple mergers and acquisitions a year reached some colleagues and answered WRAL TechWire's questions about the deal, which could receive EU approval today. Regulators in the US and Brazil have already canceled the transaction.
"Theoretically, they can have very separate operations. However, most people think that IBM overpay Red Hat as a self-employed company, "Verdonik said of the deal – the biggest ever in North Carolina – was announced last October.
IBM had to go into the bond market to raise $ 20 billion to help cover the cost of the acquisition.
"This price ($ 190 in cash for each share) makes sense only if IBM sees a lot of synergies between the two companies," Verdonik added. "It's hard to reap the benefits of synergies if the two companies really work separately.
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"So I don't think what I read about separate operations."
When the agreement was first announced, it speculated that Red Hat CEO Jim Whitehurst would be able to replace IBM President and CEO Ginni Rometty. After all, he will respond directly to her as part of Red Hat's insistence that it remains separate from IBM's comprehensive global operations.
What will really happen?
"As for Red Hat's top management, perhaps [they retain autonomy]" Verdonik says.
"Perhaps they keep autonomy."
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"Perhaps they take over IBM."
"Maybe they find themselves out on the street."
"Maybe the new companies are starting."
"Only time will tell.
" The biggest local acquisition I can remember is Duke Power and Progress Energy. As I recall, the agreement on paper was that Progress CEO [Bill Johnston] was to run the combined company. It ended before the ink was dry on the takeover signatures.
"I don't foresee this. It's just an example of the principle that reality has a way of having legal documents."
Verdonik doesn't expect layoffs at Red Hat – but what about the other way?
IBM recently recognized 1,700 jobs and has also sold some small businesses.
"I don't know how this can affect IBM employees," says Verdonik. "I would be a little more concerned about layoffs if I worked for IBM. IBM recently borrowed $ 20 billion to pay for Red Hat. This debt service can make IBM some cost savings."
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Regarding Red Hat, Verdonik says that the problem can keep employees from paying out inventory and departure – as well as being recruited.
"For a company like Red Hat, much of their value is their employees," says verdonik. "Most software industry companies expect to recruit people.
" I wouldn't be concerned about layoffs if I was a Red Hat employee. "
" The opposite is more likely, warns Verdonik. "Headhunters will raid Red Hat to recruit their best people to other businesses. The headhunters will play on fear that things will change on Red Hat.
"Also, because the IBM agreement was announced a long time ago, employees who may have wanted to take a position on other companies have probably been frozen in place. They do not want to lose the benefits of buyout by ending before the deal So I think Red Hat should work to preserve people instead of dismissing people.
INTEGRATION RELATIONS BEFORE THE SOLUTION
Whitehurst noted that Red Hat and IBM team had meetings to discuss how the merger will be carried out, but Verdonik wonders how much has been achieved.
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"Red Hat and IBM have to be a little worried about not colliding with each other before the deal closes," he says. "It could increase the antitrust problems."
"And until they close, no company will share secrets of customers. It is always possible that the closure does not take place. The word is that the opera is not over until the fat lady sings. have synergies, they must do some behind the scenes. "
LOCKUPs and RETENTION
So who stays with Red Hat because they have no choice or who will bolt?  "Retention is always a problem. Red Hat's management seems to be paid out," says Verdonik, noting recently. "In this case, cash retention bonuses seem to be the chosen retention tool."
For example, Whitehurst is among those who are locked for longer than one year. His deal is for three with $ 15 million in stock at stake.
According to one filing:
"Mr. Whitehurst's retention arrangement allows him to receive a new assignment of IBM restricted shares with a grant date fair value per closing equivalent of $ 15,000,000. This limited share price portion is distributed one-third on the third anniversary of the closure and two-thirds of the fourth anniversary of the closure, subject to Mr. Whitehurst's continuing employment and is not subject to faster recovery. "