Novell buys SuSE Linux with IBM backing

Novell will today reveal that it has entered into an agreement to acquire SuSE Linux, putting it at the forefront of enterprise Linux development.

As part of the deal, which values SuSE at $210m, IBM will invest $50m in Novell convertible preferred stock.

Novell and IBM are also negotiating extensions to IBM's agreements with SuSE for support of its eServer and middleware products.

Novell chairman Jack Messman (pictured) said that Linux had become an increasingly important part of the company's cross-platform vision, and that the move was a response to customer demand for open standards-based computing.

"The acquisition will complete Novell's ability to offer enterprise-class Linux solutions to our customers from the desktop to the server," he said in a statement.

In August, Novell purchased server and desktop open source software provider Ximian and is preparing a Linux desktop based on the Ximian Gnome desktop GUI and other Ximian developments.

In September, Messman promised that Novell would be the single point of contact for Linux support and that it would train 1,000 support engineers.

He further insisted that Novell and Ximian would be the "catalyst" for desktop and enterprise Linux.

Messman added that the combination of SuSE and Novell would provide organisations with a secure, reliable Linux foundation.

Mike Davis, senior researcher at analyst Butler Group, said Novell had been trying to reposition itself because its NetWare [operating system] was very dated. But he thought IBM's involvement was the most telling element in the deal.

"SuSE became more vulnerable after the SCO Group, which has worldwide offices, pulled out of United Linux. IBM has a great need to maintain viable and strong distributions. So a bit of me says this is directly as a result of SCO's actions," he said.

The transaction is subject to regulatory approval and shareholder agreements, but Novell expects completion to be in January 2004.

Germany-based SuSE is number two to Red Hat in worldwide enterprise Linux distributions.

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