Micro Focus Sells SUSE Linux Business Unit to EQT for $2.5B

NEWS ANALYSIS: SUSE is set to become an independent business once again, as growth investment firm EQT acquires the Linux vendor from Micro Focus.

SUSE EQT

Micro Focus announced on July 2 that it is selling its SUSE business unit to growth investment firm EQT Partners for a total cash consideration of $2.535 billion.

SUSE is a Germany-based Linux distribution vendor that has expanded into the growing market of cloud and container services. The company announced its latest flagship release of SUSE Enterprise Linux, version 15, on June 25, providing a new unified code base across its Linux portfolio, which includes SUSE Linux Enterprise Server (SLES) for SAP Applications, SLES for Power and SUSE Linux Enterprise for High Performance Computing.

"Today is an exciting day in SUSE's history. By partnering with EQT, we will become a fully independent business,” Nils Brauckmann, SUSE's CEO, wrote in a statement. "The next chapter in SUSE’s development will continue, and even accelerate the momentum generated over recent years."

SUSE has changed ownership multiple times since the company was founded in 1992. Novell acquired SUSE for $210 million in November 2003 and helped to advance it from a regional company to a global software player. Novell in turn was acquired in 2011 by Attachmate in a $2.2 billion deal. Three years later in 2014, Micro Focus acquired Attachmate for $2.35 billion.

Micro Focus itself became a larger business at the end of 2017 as a result of the merger with Hewlett Packard Enterprise's software business. After the HPE merger, Micro Focus' management decided to investigate separating the SUSE business unit.

"At the time of the acquisition, the SUSE Business represented just over a fifth of the revenues of The Attachmate Group, which we acquired for $2.35 billion," Kevin Loosemore, executive chairman of Micro Focus, wrote in a statement. "In the three and a half years since that time we have invested significantly in the SUSE Business."

SUSE revenue has been growing at a steady pace. According to Micro Focus, SUSE generated revenue of $303.4 million in 2017, up from $253.8 million in 2016. For the first six months of 2018, SUSE has already reported revenue of $164.4 million. While SUSE has grown, the company still trails its primary Linux rival Red Hat, which reported $2.9 billion in revenue for its fiscal 2018, up by 21 percent from 2017.

Don't Expect Major Changes

It's not likely the acquisition of SUSE by EQT will result in any major changes at SUSE. The company had largely been operating as a separate unit at Micro Focus with its own strategic direction. SUSE was largely operating as a separate unit at Attachmate as well, a change from when the company was owned by Novell, which took a more hands-on approach to direct the Linux company's strategy.

Current SUSE CEO Nils Brauckmann will continue to lead the company after the EQT acquisition is completed. SUSE is also remaining committed to its core open-source model, which enables enterprises to build and deploy software-defined infrastructure. In the market for Linux distribution software, the primary competition for SUSE will continue to be Red Hat and Canonical's Ubuntu, both of which offer container and cloud services based on the same open-source projects that SUSE also supports.

What the EQT deal does is it provides new stability for SUSE as the company continues to develop its niche in the growing market for open-source software-based infrastructure.

Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.

Sean Michael Kerner

Sean Michael Kerner

Sean Michael Kerner is an Internet consultant, strategist, and contributor to several leading IT business web sites.