Home / Deals / Advised SUSE Linux, the leading Enterprise Linux company, on its sale to Novell

Advised SUSE Linux, the leading Enterprise Linux company, on its sale to Novell
Nov 2003
(a portfolio company of Apax)
acquired by
$210 million
  • Sector: Infrastructure Software & Cybersecurity
  • Deal Type: Strategic Deals; Venture Capital Exits
  • Engagement type: Sellside
  • Size: $210 million
Scroll

We are delighted to announce our first transaction at Arma Partners, only a few months after our formation. On the 4th of November our client, SUSE LINUX AG, was acquired by Novell Inc. for $210m in cash. The deal represents the largest VC-backed M&A exit in the European technology sector for the past two years, and an exceptional return for the investors who have supported SUSE.

The transaction was also a significant one for Novell, which rose 25% in value on announcement of the acquisition. In our view, the deal will have a major impact on the Linux industry as Novell now enters the Linux OS sector, a market currently dominated by Red Hat, and both companies compete against Microsoft for enterprise OS deployments worldwide.

– SUSE Linux is a market leader in Linux operating systems in Europe and the second largest provider worldwide

– Established 1992, SUSE Linux had revenues of €40m in 2002, employing 399 staff worldwide

– The company has won significant accounts against incumbent OS companies and is widely seen as the technology leader in Open Source OS

– Novell (NASDAQ: NOVL) provides infrastructure components that work across multiple platforms and are designed to secure and connect personal computers in corporate networked environments

– Specific offerings include identity and access management products, resource management products, Open Enterprise Server, NetWare and Unix

– Novell has over 4,500 employees in 23 offices worldwide

– With the acquisition of SUSE, Novell could re-invent itself to become a leading Linux company

– Novell expands its open source commitment and will become the first to offer comprehensive Linux solutions for the enterprise from the desktop to the server. Novell will be the only $1 billion software company with a Linux distribution

– In the two weeks following announcement, Novell’s market capitalization doubled

– Arma Partners created fierce competitive tension around SUSE and ran an intense Dual Track process (fund-raising and trade sale) that took less than two months from its initiation to announcement

– The process was tailored to maximise value for SUSE shareholders. As a result, the final purchase price was in well in excess of 2x the initial proposals by interested parties, a great result considering the fact that SUSE was loss-making and the M&A environment very unfavourable

– This transaction is widely regarded as an industry-shaping deal which validates Open Source and helps to bring Linux deep into the enterprise

– In conjunction with this deal, IBM invested $50m in the form of convertible preferred stock into Novell

Back to deals