IBM on Sunday announced its plan to buy software maker and open source enterprise Red Hat for 34 billion U.S. dollars in the largest software acquisition deal.

IBM and Red Hat said in a joint statement that they have reached a definitive agreement under which IBM will acquire all of the shares of Red Hat for 190.00 dollars per share in cash, "representing a total enterprise value of approximately 34 billion dollars."

The IBM deal is the biggest software acquisition in history after Microsoft bought professional social network LinkedIn with 26.2 billion dollars in 2016.

IBM said the deal will accelerate its high-value business model to make it the world's largest hybrid cloud provider in an emerging 1 trillion-dollar growth market.

"The acquisition of Red Hat is a game-changer. It changes everything about the cloud market," IBM Chairman, President and Chief Executive Officer (CEO) Ginni Rometty said.

Over the past 25 years, Red Hat has been a major distributor of the open source Linux, which is commonly used in computer servers to power corporate data centers.

IBM said that as a strong supporter of Linux, it has maintained partnership with Red Hat for over 20 years, and both have cooperated in developing and growing enterprise-grade Linux.

With the acquisition, Red Hat will become a standalone unit in IBM's cloud unit and keep its existing leaders and location in North Carolina, and IBM will see an increase in free cash flow and profit margins within 12 months.

The deal has been approved by the boards of directors of both IBM and Red Hat. It is subject to Red Hat shareholder and regulatory approvals. The purchase is expected to close in the latter half of 2019.