Novell buys into Linux as IBM buys into Novell

4 Nov 2003

Novell is to acquire SUSE Linux, the world’s number two Linux vendor, for US$210m in cash. The company also announced that IBM intends to make a US$50m investment in it.

“Novell has been dedicated to a cross-platform vision for four years now and Linux is an increasingly important part of that strategy,” said Jack Messman, chairman and CEO of Novell. “…[We are helping] customers adopt Linux with more confidence, giving them the freedom of choice Linux provides without the anxiety over whether an open source solution can truly be relied on for mission-critical functions.”

The acquisition of SUSE Linux follows Novell’s August purchase of Ximian, a leader in software for running Linux on desktops as opposed to server software where SUSE Linux’s main strength lies.

Novell began building solutions for Linux in early 2000, when it made its flagship eDirectory available on Linux. In April of this year, the company announced it would make all the services that run on its NetWare operating system run on both the NetWare and Linux kernels in the future with the full range of Novell’s worldwide technical support.

Novell expects to complete the Suse Linux transaction by the end of its first fiscal quarter, January 2004.

IBM’s US$50m investment in Novell will bein form of convertible preferred stock. Novell also announced that it is negotiating with IBM to extend the current commercial agreements between IBM and SUSE Linux for the continued support of SUSE LINUX on IBM’s eServer hardware and middleware products and to provide for product and marketing support arrangements relating to SUSE Linux. Both of these agreements will be effective when Novell’s purchase of SUSE Linux is completed.

By Brian Skelly