Red Hat acquires JBoss; takes open source to next level

Red Hat Linux has entered into a definitive agreement to acquire JBoss, a core developer of open-source middleware, built around the JBoss app server. Red Hat believes the combination of the product lines will accelerate enterprises shift to service-oriented architectures by making open-source platforms available to customers that seek to lower dev and deployment costs.

"It is at Red Hat's very core to help unlock the power of open source and open communities to innovate across industries, geographies and economies," said Matthew Szulik, chairman and CEO of Red Hat. "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."

Red Hat will acquire JBoss for approximately $350 million in initial consideration, plus approximately $70 million subject to the achievement of performance metrics. The transaction is composed of approximately 40 percent in cash and 60 percent in Red Hat common stock. The acquisition is expected to be completed around the end of Red Hat's first fiscal quarter (May 2006), subject to closing conditions, including regulatory approval.

This acquisition is expected to broaden the market for Red Hat and JBoss partners who are building value-added enterprise solutions.

"The union of these two companies will demonstrate the benefits of a pure open-source play," said Marc Fleury, CEO of JBoss. "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."

Red Hat believes that the acquisition will be slightly dilutive to its quarter ending August 31, 2006, but neutral to earnings and cash flow for the full fiscal year. The transaction is expected to be accretive to both earnings and cash flow in the next fiscal year ending February 28, 2008.

For more information please visit the Red Hat or JBoss Web sites.