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.
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.
At the moment, IBM is trading down at -0.5% on an otherwise slight green Nasdaq.
Just from these numbers we can conclude that IBM is seeing some pretty significant synergies in the purchase that the market isn't.
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.
At the moment, IBM is trading down at -0.5% on an otherwise slight green Nasdaq.
Just from these numbers we can conclude that IBM is seeing some pretty significant synergies in the purchase that the market isn't.
[1] https://www.barrons.com/articles/ibm-bond-sale-red-hat-51557...