Red Hat To Buy JBoss
Raleigh, N.C.-based Linux distributor Red Hat said 40 percent of the purchase price will be paid in cash and the rest in Red Hat stock. Another $70 million will be paid if JBoss hits certain performance metrics.
The deal is in the ballpark of the $400 million that JBoss is said to have wanted from Oracle, which walked away from talks to acquire JBoss earlier this year.
Red Hat's JBoss buy will give it a fuller open-source software stack, marrying its Linux operating system with JBoss's middleware. Both vendors share a business model of profiting off services and support surrounding their free software.
One Southeastern VAR quipped that the deal will be a healthy one if it means "more open source and less Marc Fleury." But the strong-headed JBoss CEO appears likely to stick around, a condition he always said was essential for agreeing to any buyout deal.
JBoss, based in Atlanta, will remain an independent division of Red Hat, Fleury said on a conference call after the deal was announced. Customers will benefit from a one-stop shop for enterprise open-source needs, he said.
Though Fleury conceded that open source is moving up the software stack to applications, and cited Sugar CRM as an example, he said "this [acquisition] announcement is clearly focused on infrastructure. Red Hat and JBoss have had proven success as [part of an] SOA platform."
The deal also raises the level of "co-opetition," since Red Hat partners to some extent with IBM and Novell. IBM fields the WebSphere application server and the open-source GlueCode app server it acquired last year. Both compete directly with JBoss' offerings. Novell, with its SUSE Linux, competes with Red Hat Linux.
Asked how this deal will affect those relationships, Red Hat CEO Matthew Szulik said, "We've had long relationships with both of those firms. They also sell non-Red Hat products. There will be opportunities for us to continue to partner and to compete."