Red Hat to create largest open-source company

Red Hat will acquire privately held Linux company Cygnus Solutions for $US674 million, creating what Red Hat estimates will be the largest open-source company worldwide.

Red Hat expects the merger to close by January 27 next year, subject to the approval of Cygnus shareholders and the usual regulatory concerns, according to a company statement released today. The transaction will be a stock-for-stock merger and the $674 million price is based on Red Hat's Friday closing price.

The aim of the acquisition is to boost Red Hat's distribution of the Linux open-source code operating system and Linux-based applications, Red Hat said.

The combined company will be headed up by Matthew Szulik, Red Hat's president, who will become both president and chief executive officer of the new entity.

Red Hat last month signed a bundling deal with Dell Computer for the PC vendor to offer the option of preloading Red Hat Linux on its server offerings.