Here’s What Awaits IBM in the EU Review of Its Red Hat Deal

US companies meet different fates at the hands of EU regulators

EU antitrust regulators have opened a review of IBM’s (IBM) proposed acquisition of Red Hat (RHT), and their decision is expected by June 27.

According to a Reuters report, there are three possible outcomes of the review. EU antitrust regulators can approve the deal without demanding concessions, or they can approve it with conditions attached, such as requiring the companies to divest certain assets. The third possible outcome is that the regulators can escalate the review to a full-blown probe, a process that could take months and throw the future of the deal into uncertainty.

Here’s What Awaits IBM in the EU Review of Its Red Hat Deal

US companies going before European regulators for takeover deal approvals have met different fates in recent months. In June last year, Comcast (CMCSA) secured the European Union’s unconditional approval of its deal to acquire European broadcaster Sky for nearly $40 billion. But in November, EU regulators demanded that the Walt Disney Company (DIS) and Fox Corporation (FOXA) divest certain assets to win their approval.

On its part, PayPal’s (PYPL) deal to acquire payment company iZettle sailed through smoothly in all jurisdictions but one. UK antitrust regulators subjected the deal to a full-blown review and only provisionally cleared it last month.

Red Hat to be a boost to IBM’s cloud business

IBM announced its plan to take over Red Hat in October 2018. IBM agreed to pay $34 billion to acquire Red Hat, marking its largest acquisition deal ever. The purchase of Red Hat is expected to be a massive boost to IBM’s cloud computing business, especially in the hybrid cloud market. The global hybrid cloud market was valued at $36.1 billion in 2017, and it’s forecast to top $171.9 billion by 2025, according to Allied Market Research.