Red Hat, the leader in open source Internet infrastructure solutions, announced today that it has signed a definitive agreement to purchase privately held C2Net Software, Inc. C2Net Software is the developer of the popular Apache-based Stronghold secure web server. C2Net customers include Amazon.com, Ameritrade, IBM and Morgan Stanley Dean Witter Online.
"Enterprise customers want a single source for complete solutions to build out their Internet infrastructure. With the acquisition of C2Net, Red Hat adds security to our growing capabilities of OS development, tools and e-commerce that delivers unprecended value to our customers," said Matthew Szulik, president and CEO of Red Hat, Inc. "Powerful, secure solutions like C2Net's Stronghold and the rapid technological advancement of the open source development model, which
finds and fixes holes faster than proprietary development, delivers organisations a safe, advanced foundation for e-business initiatives."
Red Hat continues to broaden its product offerings to deliver a complete spectrum of Internet infrastructure solutions--which include powerful and secure Web servers, post-PC devices connected to each other through those servers, and the complete chain of development tools and services needed to rapidly create, deploy and manage Internet infrastructure. Red Hat's solutions leverage open source software to deliver all the necessary tools and services to
deploy, manage and scale the Internet with a single open source platform.
Under the terms of the agreement, Red Hat will issue 1,992,883 shares of Red Hat common stock in exchange for all of the outstanding securities of Oakland, California-based C2Net. The transaction will be valued based on an average closing price of Red Hat's common shares for the seven-day period ended August 16,2000. The acquisition will be accounted for as a purchase and is expected to be completed by August 31, 2000, subject to customary closing conditions.
According to the most recent InformationWeek "Global Security" survey, 74 per cent of companies suffered downtime due to security breaches or espionage and 71 per cent of executives and technology managers rank information security as a high priority for their business. C2Net's Stronghold, which is based on Apache and available for many operating system platforms, is the most popular commercial SSL Web server on the Internet with more than 30 percent of the secure web server market, according to Security Space. Red Hat Linux is the most popular open source operating system (OS) for Web servers and sites, with more than 72 per cent of all Web sites running Linux choosing Red Hat according to the latest Netcraft survey (www.netcraft.com). The acquisition combines these market leaders to deliver the secure e-commerce infrastructure solutions that are in incredible demand in today's organisations.
"Red Hat has a tremendous vision, expertise and market lead as the platform for a new generation of Internet and post-PC solutions. C2Net's Stronghold product is the most popular secure Web server for UNIX systems, and C2Net customers have always enjoyed the benefits of open source development," said William Rowzee, CEO of C2Net. "But there is tremendous synergy between Red Hat and C2Net that extends beyond our enthusiastic support of open source software
and its world-wide community of developers. We are very excited to be able to leverage Red Hat's unique spectrum of packaged solutions and services in providing even more comprehensive solutions for our customers."
C2Net is the fifth major acquisition for Red Hat in 2000. In July, it completed the acquisition of WireSpeed, a leading developer of network and telecommunications software that helps connect a new generation of post-PC and embedded devices to the Internet and secure Web servers like Stronghold. In May, Red Hat acquired Bluecurve, whose performance management solutions allow organisations to simulate and measure user activity and demands placed on the Internet
infrastructure and applications. And in January, Red Hat acquired both Hell's Kitchen Systems, a provider of e-commerce payment processing software critical for any company trying to conduct business on the Web, and Cygnus Solutions, a top provider of a wide variety of software, tools, services and developer support for servers, real-time operating systems
(RTOS) and embedded, post-PC platforms.
Open Source Momentum
International Data Corp. (IDC) research states that paid Linux shipments grew faster than any other server operating system over the past two years, and their preliminary figures for 1999 show Linux shipments hold 24.6 per cent of the server operating system market, up from 15.8 in 1998. IDC also states that Red Hat holds 50.2 per cent of Linux vendor market share and that Red Hat Linux is by far the most popular distribution, preferred by 68.7 per cent of U.S. Linux users.
Research firm Netcraft, Inc. (www.netcraft.com), states that as of May 2000, 36 per cent of all public Web sites run on Linux-based operating systems, making Linux the most popular choice for deploying public Web sites. IDC research shows
40 per cent of all spending on Linux servers is for Internet related applications, firmly entrenching Linux servers in the Internet infrastructure.
Finally, IDC predicts that by 2002, there will be more than 55 million handheld and notebook-style information appliance devices and that by 2005, shipments of these appliances will exceed shipments of PCs.
Red Hat's numerous alliances with industry leaders and the demand for Linux-based applications has created open source support from many of the industry's leading software and hardware manufacturers, including Dell, Compaq, Computer Associates Hewlett-Packard, IBM, Intel, Netscape, Novell, Oracle and SAP.
About C2Net
C2Net is the global provider of Stronghold secure web server software. Stronghold is available for more than 30 platforms, including several versions of Linux and most other common UNIX platforms.
As the first commercial server to support SSL and make its source code available to the development community, C2Net's Stronghold server has been leading the creation and adoption of security standards and protocols in Web-based computing for years. Stronghold was the first SSL Web server to support: 128-bit encryption, HTTP/1.1, SSL client certificates and hardware crypto acceleration. Stronghold 3, the latest version of C2Net's solution, includes administration tools
for easy installation, powerful server-side scripting and unlimited virtual hosting on one license.
C2Net's customers include a blue-chip roster of leading Internet e-commerce businesses including Amazon.com, Ameritrade, Earthlink/Mindspring/Netcom, IBM, Lucent Technologies, Morgan Stanley Dean Witter Online, Network Solutions, USA.net, US Department of Energy, US Federal Courts, and Verio, Inc.
C2Net was founded in 1994 and has offices in Oakland, California and Newbury, England. The Company's revenues increased 46 per cent in 1999 to $3.25 million. Additional information and free evaluation copies of Stronghold are available at http://www.c2.net/
About Red Hat,
Founded in 1994, Red Hat is a leader in the development of Linux-based operating system software (OS) and services. Based in Durham, N.C., Red Hat builds the most accessible and advanced server OS available anywhere with technical innovations such as RPM and the disk druid installation tool. Red Hat Linux is available for Intel, Compaq Alpha and
Sun SPARC platforms. Red Hat Linux available directly from the company and through Red Hat's partner, distributor and reseller programs, which include top PC and server manufacturers like Dell, IBM and Hewlett-Packard.
Red Hat Europe was established in July 1999 with its European headquarters based in Surrey, United Kingdom and offices throughout Europe. Red Hat Linux is sold and supported through a number of major distribution and industry partners throughout Europe and from www.europe.redhat.com/shop.
Red Hat Linux was named InfoWorld's Product of the Year for four years in a row, was given a productivity accolade in Software Development's Jolt Awards, was named an environment/desktop finalist in the Ziff-Davis European Excellence Awards, won the editor's choice awards from the Linux Journal and Australian Personal Computing magazines, and won the 'Just Plain Cool' award from Australian Personal Computing magazine.
At March's LinuxWorld Expo, more than 8,000 members of the Linux community voted Red Hat a 'LinuxWorld Favourite'. Red Hat Linux recently won a Product Excellence award from Software Development Magazine.
LINUX is a trademark of Linus Torvalds. RED HAT is a registered trademark of Red Hat, Inc. UNIX is a registered trademark of The Open Group. All other names and trademarks are the property of their respective owners.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this press release are made pursuant to the safe harbour provisions of Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that statements in this press release that are not strictly historical statements, including, without limitation, management's plans and objectives for future operations and management's assessment of market factors, constitute forward-looking statements which involve risks and uncertainties. These risks and uncertainties include, without limitation, product plans and performance, the ability to continue to develop the Linux kernel and other software, reliance upon strategic relationships, Red Hat's
dependence upon an open source business model, reliance upon independent third-party Linux developers, management of growth, expansion of Red Hat's business focus and operations, the possibility of undetected software errors, the enforceability of the GNU General Public License and other licenses under which Red Hat's products are developed and licensed, the scarcity of Linux-based applications, the risks of economic downturns generally, and in Red Hat's
industry specifically, the risks associated with competition and competitive pricing pressures, the viability of the Internet, and other risks detailed in Red Hat's filings with the Securities and Exchange Commission, copies of which may be accessed through the SEC's Web site at http://www.sec.gov.