April 3, 2006 5:58 AM PDT
JBoss CEO: Buyout talk got 'out of hand'
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Without explicitly acknowledging any negotiations with Oracle, CEO Marc Fleury said Friday that his open-source software company regularly receives requests to discuss possible acquisitions by larger corporations.
"We have always in our history, almost every quarter, had an incoming request" to discuss a potential acquisition, he said. "Some go further than others...We have had many such discussions."
At the same time, the company may end up raising money in a form other than a sale: Fleury said he met with Silicon Valley venture capitalists a few months ago to explore a second round of venture funding.
That equity, which would complement a $10 million dollar venture investment, would be a step toward potentially going public, he said.
"To get to the next level, it will probably be equity for an IPO or the right M&A," Fleury said, referring to a merger and acquisition. He added that business is strong at JBoss now.
Discussion over JBoss' future peaked in February when rumors surfaced that the company would be bought out.
Articles in BusinessWeek and The Wall Street Journal said that database giant Oracle was in discussions to buy JBoss and two other open-source companies. One industry executive at a JBoss competitor said in late February that discussions between the Oracle and JBoss broke down over price, with JBoss insisting on selling for 20 times its current revenue.
Fleury called the media coverage "almost a riot mentality where all of a sudden the mob gets out of control." He called some of the reporting "craziness" and "nonsense."
"It's surprising that this rumor got so out of hand," he said. "We have never gone out and actively shopped the firm."
Echoing previous comments, Fleury said that being absorbed by a larger company that sells closed-source Java middleware would pose problems. Such middleware, which includes applications servers and portals, runs custom business applications written in Java.
Fleury said there is an "impedance mismatch" between JBoss and companies such as IBM, BEA Systems and Oracle, which rely on license revenue from closed-source Java middleware, and, in general, do not give customers access to product source code. JBoss' business model is to offer its software for free and charge ongoing subscription fees for support.
"Every time there is an (acquisition) discussion, which has happened many times, divisional control and capacity for us to continue doing what we're doing unchanged--that's always something on the table, by the way, by both parties," he said.
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