The leading Linux company is picking up the leading open-source Java Enterprise Server company for at least $350 million.
Red Hat, the leading Linux distributor, announced on April 10 that it has entered into a definitive agreement to acquire open-source Java middleware company JBoss.
JBoss has been rumored to be on the acquisition block for months. Earlier this year there was much speculation that Oracle was going to acquire the Atlanta-based JBoss, but JBoss CEO Marc Fleury said he had no immediate plans to sell the company.
Red Hat will pay at least $350 million for JBoss. That will be made up of 40 percent cash and 60 percent Red Hat stock. An additional $70 million may be paid depending upon JBoss financial performance. Oracle had been alleged to have been looking to pay from $300 million to $480 million for JBoss.
The deal is expected to close in May. If completed as planned it will add to Red Hats earnings next year.
In early Monday morning trading, the market enthusiastically greeted the proposed deal with a jump of almost 10 percent on extremely high volume.
"Red Hat and JBoss are fully aligned around the belief that the open source development model continues to change the economics of enterprise IT in favor of the customer, and we truly believe in the potential of software innovation, once freed from the fetters of proprietary development, " said Matthew Szulik, Red Hat chairman and CEO, in a statement.
"The union of these two companies will demonstrate the benefits of a pure open source play," JBoss CEO Fleury said in a statement.
"Our customers are increasingly standardizing their infrastructures on open source technologies and want a stable and trusted global open source vendor to support them. By joining forces with Red Hat, we expect to be able to provide enterprises the largest offering of open source solutions, a global services network staffed by technology experts, and a large and vibrant eco-system of certified products and services. This is a winning combination that we believe will further expedite the proliferation of open source in the enterprise, which has been our mission since day one."
One of the goals of the deal is to create a comprehensive open-source platform for the enterprise. At the same time, Red Hat will continue to support multiple middleware platforms and the JBoss Enterprise Middleware Suite will continue to operate on multiple operating platforms.
A former member of the JBoss team accused the company of using bad business practices and stifling competition. Click here to read more.
For example, JBoss will continue its partnerships with other companies from both the Linux and open-source world, including Novell, as well as proprietary software companies such as Microsoft.
The combined company will also continue to invest in development of new open-source technologies while reaching out to the wider open-source community as a whole to encourage continued and active participation in the success of combined open-source projects.
The immediate release plans for JBoss products and technologies will be unchanged by the Red Hat acquisition, according to company officials. Once the deal is completed, Red Hat will provide technology road map and integration plans. Company officials declined to say at this point if the JBoss code base will be merged with Red Hats Linux distribution.
Product development and packaging announcements will occur only after the deal is closed.
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Steven J. Vaughan-Nichols is editor at large for Ziff Davis Enterprise. Prior to becoming a technology journalist, Vaughan-Nichols worked at NASA and the Department of Defense on numerous major technological projects. Since then, he's focused on covering the technology and business issues that make a real difference to the people in the industry.