August 14, 2000 11:20 AM PDT

Red Hat adds Web server software with C2Net buy

Red Hat has agreed to acquire C2Net in a stock deal worth about $44 million, expanding its domain from Linux to another major open-source package, Apache Web server software.

The move puts pressure on Covalent Technologies, a start-up that also sells support for Apache software, and Linuxcare, which plans to expand to support other open-source software packages besides Linux.

Apache software runs on servers and is used to deliver Web pages to browsers. A new version is expected as soon as the end of the year. Apache is the most popular package used on public Web sites, according to an ongoing survey by research firm Netcraft.

C2Net has a version of Apache called Stronghold that includes an encryption package for Web sites that use Secure Sockets Layer (SSL) software for secure transactions such as sending credit card information. The company had revenue of $3.25 million in 1999.

Linux, a clone of the Unix operating system that competes with server operating systems such as Microsoft Windows and Unix itself, is widely considered the best-known open-source software. Apache is likely in second place, competing chiefly with Microsoft's Internet Information Server and with Web server software from the Sun-AOL iPlanet partnership.

C2Net customers include Amazon.com, IBM, Ameritrade and Morgan Stanley Dean Witter Online, Red Hat said.

Under the terms of the deal, Durham, N.C.-based Red Hat will issue 1,992,883 shares for C2Net, based in Oakland, Calif. The stock price will be based on the average closing price of Red Hat stock during a seven-day period ended Aug. 16, Red Hat said.

Open-source software can be modified and redistributed by anyone and is available for free or very cheap. However, because it's often produced by collections of volunteers, it's not always easy to install or use. For this reason, several companies--Red Hat chief among them--have sprouted up selling easier installation, software boxed with instruction manuals and support services.

Red Hat has acquired five companies since its initial public offering a year ago: Cygnus Solutions, Hell's Kitchen, WireSpeed, Bluecurve and now C2Net.

C2Net has offices in Newbury, England, as well as Oakland. Both offices will stay open, Red Hat said.

 

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