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Red Hat to Acquire JBoss

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Red Hat agreed to acquire open source middleware provider JBoss for $350 million, plus approximately $70 million subject to the fulfillment of performance metrics in the future.
In a deal valued at $350 million, the OS vendor will pick up distributed computing platforms for its customers.

Red Hat will pay 40 percent in cash and 60 percent in stock for JBoss, a move Red Hat said will help its move into providing customers open platforms for service-oriented architecture (SOA).

The move is being described by many as a natural fit. Red Hat is a leading provider of Linux operating systems, competing with Novell. It also sells a Linux-based application server, among other types of middleware.

JBoss, which makes an open source application server and several other middleware components for distributed computing, has modeled its business after Red Hat’s subscription model for offering free software and charging for services and support.

Together, Red Hat’s Linux operating system and JBoss’ middleware can be a synergistic offering and open source alternative for customers that shy away from proprietary offerings from IBM, Oracle, Sun Microsystems, and Microsoft.

These companies compete in a software sector Gartner said will be worth more than $6.4 billion in 2006.

“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 Red Hat Chairman and CEO Matthew Szulik in a statement.

“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.”

Szulik said on a conference call today Red Hat does not anticipate the acquisition will affect its distribution deals with JBoss rivals like IBM or Oracle. JBoss CEO Marc Fleury agreed, adding that the deal has been well received by applications vendors and independent software vendors.

Fleury said that while the companies cultures are different, they are both working toward the same goal of providing a complete open source software platform.

“Professional open source is about dispelling the myth that open source development happens by itself,” Fleury said.

Red Hat expects to complete the deal in May.

The deal comes just days after Red Hat, JBoss, and other open source players finished presenting their wares at LinuxWorld in Boston. It also comes several months after Oracle was rumored to have negotiated to buy JBoss.

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