Tarantella Thursday said it would acquire New Moon Systems in an effort to expand its product line and more effectively compete against Citrix Systems, the dominant player in the server-based computing market.
Under the terms of the deal, expected to close June 5, Tarantella will purchase all of the stock in privately held New Moon in exchange for nearly 8 million shares of Tarantella common stock. In addition, Tarantella guarantees New Moon shareholders will receive a minimum royalty on the acquired products of $2 million over a three-year period.
New Moon targets small and midsize customers as well as departments of larger customers with its Canaveral iQ product line. It markets the products as a simpler, cheaper alternative to Citrix's MetaFrame platform for hosting and centrally managing Windows applications in a Windows Terminal Services environment.
Tarantella's Enterprise 3 software runs on Unix or Linux and provides enterprise customers with access to Unix, Linux, mainframe, AS/400 and Windows Terminal Server applications.
With the acquisition, Tarantella and its channel partners will have a product line to offer customers that want to run server-based computing environments on Windows systems, said Guy Churchward, chief evangelist at Tarantella, Santa Cruz.
"That's a space we've inherently been walking away from," Churchward said.
Tarantella plans to maintain the Canaveral iQ brand name and operate the New Moon business like a separate unit, retaining the channel support infrastructure New Moon solution providers currently utilize, Churchward said.
The vendor also expects to maintain New Moon's channel program for now, with plans to blend the two programs over time, he said.
The acquisition will add 200 New Moon channel partners to Tarantella's 300-member solution provider community.
Qualified partners will be able to sell and service both product lines, he said.
Tarantella last week said it was granted a temporary extension to continue listing its stock on the Nasdaq SmallCap Market after failing to meet minimum bid price and shareholder equity requirements as of March 18.
After the close of the New Moon transaction, which is expected to add approximately $3 million to Tarantella's cash position, the vendor plans to execute a reverse stock split and issue one share for every five held by shareholders.
Churchward said the bulk of New Moon's employees would join Tarantella, including Marc Lowe, president and CEO of San Jose, Calif.-based New Moon.
The vendor did not disclose New Moon's employee head count.
Shares of Tarantella closed up 4 cents at 47 cents Thursday prior to the announcement.