Mandrakesoft acquires South American Linux distro

Posted on 24 Feb 2005 at 16:03

Linux platform builder Mandrakesoft has announced a stock swap deal to acquire its Brazilian equivalent Conectiva.

In what can only be described as a Pheonix-like rise from the ashes of near insolvency a year ago, Mandrake has since announced its most profitable quarter ever, posted a net income for the year, inked numourous deals with new customers and acquired a support company.

Now its guns are aimed at bigger game. Conectiva is the leading Linux distribution in South America, and is enjoying something of a renaissance itself as the public sector takes an increased interest in the open source platform.

Its products are currently used in Brazilian schools, and by the nation's military forces, as well as commercial companies such as HP, IBM and HSBC.

During the last fiscal half-year, Conectiva broke even, and Mandrake will be hoping that some of its own high growth will rub off on its new acquisition. Conectiva announced revenues of 1.7mn Euros last year compared with Mandrake's 6.7mn Euros.

The deal will see Connectiva account for 1.79mn Euros' worth of Mandrake stock. The company currently has a market cap on the Euronext Paris - March?ibre of just over 40mn Euros. This represents about 4.5 per cent.

Mandrakesoft's co-founder Ga?Duval told us the company had been eyeing acquisition targets for a year. 'Conectiva has excellent technology and big business potential in an area that we weren't addressing yet. Furthermore, we have found that Mandrakesoft and Conectiva had an excellent cultural fit, which is a very important point to consider for merger and acquisitions.

'Mandrakesoft has traditionnally been adressing the US and the European market. The Conectiva acquisition is an excellent opportunity to address the South-American Linux market which has a strong potential.'

Duval said the company intends to 'merge most of our product lines and service offerings,' and 'announce in two months if we keep Mandrakesoft name or if we adopt a new name.'

He added that support and training services will also be merged.

Conectiva employs 60 people. Duval said he didn't expect there to be much overlap but that Mandrakesoft would deploy developers on other projects if it needed to. The developers will continue to work from their existing bases. 'It's likely that Conectiva's developers will focus on a part of the product or a part of the range of products, and Mandrakesoft developers on the other part.'

The deal also improves the company's standing in comparison with its bigger brothers Red Hat and Novell's SUSE.

'Despite the fact that we're a smaller actor, at least in term of income, our ambition has always been to be a worldwide leader, and the Conectiva acquisition is part of this strategy,' said Duval.

Author: Matt Whipp