November 4, 2003

FLASH - Novell buys SuSE

Author: Robin 'Roblimo' Miller

NewsForge received the official press release today at 8:15 a.m., US EST. It's reprinted below, lightly edited, and we'll have a followup story after the official press conference that's scheduled to start at 11 a.m. US EST.Novell Announces Agreement to Acquire Leading Enterprise Linux Technology

- Novell will be the only $1 billion software company with a Linux distribution
and the worldwide technical staff to support it

- Novell/SUSE LINUX to become the world's largest supplier of desktop-to-server
Linux solutions and technical support

- Customers to gain worldwide technical support for enterprise Linux solutions
from a company with more than 20 years of operating system experience
IBM and Novell to negotiate extensions to commercial agreement with
Novell/SUSE LINUX to support the IBM eServer line

With the
open source expertise of SUSE LINUX and Novell's world-class networking and
identity solutions and support, training and consulting services, Novell will
be able to deliver Linux and all its components -- from the server to the
desktop and give organizations a secure, reliable and mature Linux
foundation. Novell will pay $210 million in cash to complete the acquisition.
The transaction is subject to regulatory approval and the winding up of
shareholder agreements. Novell expects the transaction to close by the end of
its first fiscal quarter (January 2004).

This latest move follows Novell's August purchase of Ximian, a leader in Linux
server and desktop solutions, and further demonstrates Novell's ongoing
commitment to provide customers a full range of Linux solutions. Both the
Ximian and SUSE LINUX acquisitions affirm Novell's commitment to promoting
the open source model and developer community.

Novell today also announced that IBM intends to make a $50 million investment
in Novell convertible preferred stock. In addition, Novell and IBM are
negotiating extensions to the current commercial agreements between IBM and
SUSE LINUX for the continued support of SUSE LINUX on IBM's eServer products
and middleware products to provide for product and marketing support
arrangements related to SUSE LINUX. Both of these agreements will be
effective when the acquisition of SUSE LINUX by Novell is completed.

"Responding to customer demands for open, standards-based computing, 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. "The acquisition of SUSE LINUX will complete
Novell's ability to offer enterprise-class Linux solutions to our customers
from the desktop to the server. No other enterprise Linux vendor has the
operating system experience and the worldwide technical support capabilities
that Novell will be able to deliver. Novell is bringing our significant
resources to bear to help 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."

"Novell understands the power of open, standards-based computing, and has been
moving in that direction for some time," said Richard Seibt, CEO of SUSE
LINUX. Novell's global reach, marketing expertise and reputation for
security, reliability and global enterprise-level support are exactly what
we've been seeking to take SUSE LINUX to the next level. We've also been
impressed by the incredible loyalty and competence of Novell customers and
business partners, and we're looking forward to joining forces to help
customers gain the benefits of Linux and to help Novell continue to expand
its role in the open source community."

SUSE LINUX Offerings Complement Novell Linux Services

SUSE LINUX offers a range of Linux server and desktop solutions designed to
meet the diversified needs of different organizations. SUSE LINUX Enterprise
Server 8 for midsize to large companies provides a range of core networking
services with the high-availability and scalability features needed for
mission-critical environments.

SUSE LINUX is the leading enterprise Linux company in Europe. In addition,
through its relationships with Conectiva and Turbolinux, SUSE LINUX has been
a leader in Latin America and Asia, as well. SUSE LINUX is also one of the
top providers of Linux to enterprises in the United States and North America.
Novell's extensive global sales and channel programs, proven and reliable
technical support capabilities, as well as ongoing Novell and SUSE LINUX
relationships with key partners like IBM, Oracle, SGI, Fujitsu-Siemens, Dell,
Intel, AMD, SAP, HP and others, provide a powerful business network to
promote more rapid Linux adoption around the globe.

Novell's Linux Strategy

The acquisition of SUSE LINUX will be an important step in Novell's efforts to
accelerate enterprise adoption of Linux. Novell began building solutions for
Linux in early 2000, when it made its flagship eDirectory technology
available on Linux. In April of this year, Novell 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. In August, Novell acquired Ximian with its
leading Linux desktop management solutions and its visionary leadership to
promote Linux desktops and to enable Microsoft .NET* applications to run on

In September, Novell announced the open beta of Novell® Nterprise Linux
Services (NLS), an offering that runs on SUSE LINUX and Red Hat* and provides
a variety of networking services for Linux environments. IBM, HP and Dell
have all licensed the NLS technology for resale to their customers. With SUSE
LINUX, Novell expands its reach to developers and ISVs looking for a complete
Linux solution. Today\x{2019}s announcement of Novell's plans to acquire SUSE LINUX
strengthens Novell's already proven set of Linux offerings by allowing Novell
to distribute the underlying Linux platform itself, in addition to the many
value-added services for Linux that Novell already offers.

"We chose SUSE LINUX because they are a clear market leader in Linux
technology for the enterprise," Messman said. "With this acquisition, Novell
will be the only billion-dollar software company with a Linux distribution
and a worldwide ecosystem around it. A worldwide technical staff of more than
600 has been trained to support Linux. The acquisition of SUSE LINUX
completes our technology stack from the desktop to the server."

Beyond the technology, the acquisition will also expand Novell's strategic
commitment to the open source community. The combination of SUSE LINUX and
Novell will deliver not only complete enterprise Linux software solutions,
but also worldwide channels and industry-leading partnerships. The combined
company will help promote a thriving, global open source ecosystem that
creates innovation and choice for developers, users and organizations alike.
Novell is firmly committed to open standards and maintaining the existing
open source kernel development efforts. From advocacy and development
resources to events and support of open source efforts like kernel projects,
XFree86, ReiserFS, KDE, GNOME and Mono, Novell stands side-by-side with the
open source community.

Citigroup Global Markets Inc. acted as Novell's financial adviser to the
transaction. Clifford Chance Punder served as Novell's legal counsel. Arma
Partners acted as financial adviser to SUSE LINUX and its stockholders.
Freshfields Bruckhaus Deringer served as legal counsel to SUSE LINUX and its
stockholders. SUSE LINUX investors are e-Millenium 1, AdAstra Erste
Beteiligungsgesellschaft mbH and APAX Partners & CO.

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