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Red Hat, the world's biggest seller of Linux software, has bought Ra'anana-based Qumranet Inc., a developer of desktop virtualization solutions, for $107 million.
"Red Hat customers enjoy highly responsive, flexible and cost-effective IT infrastructures," Red Hat president and CEO Jim Whitehurst said in a statement Thursday. "This acquisition furthers our capability to widen the gap between open-source and proprietary infrastructure software.
"Put simply, Qumranet's KVM [Kernel Virtual Machine] and VDI [Virtual Desktop Infrastructure] technologies are at the forefront of the next generation of virtualization. They represent an opportunity to raise the bar and meet the market's demand for virtualization solutions."
Desktop virtualization is an emerging technology that promises cost-savings from delivering the software that PCs need over a network. The system makes it cheaper to manage software, since IT departments can change a setting on the Windows operating system once, and all employees get the change as soon as they access their virtual desktops, rather than IT having to push the change to tens of thousands of PCs.
Under the terms of the transaction, Red Hat paid $107m. in cash for Qumranet. The acquisition is not expected to contribute materially to revenue in the fiscal year ending February 28, 2009, but should add up to $20m. in revenue in the following year, the Raleigh, North Carolina-based company said in the statement.
Red Hat expects Qumranet's operating expenses will be approximately $3.5m.-$4.5m. per quarter before non-cash stock-based compensation expense, amortization expense and other charges resulting from the closing of the acquisition.
Qumranet was founded in 2005 by CEO Benny Schnaider, president Rami Tamir, CTO Moshe Bar and chairman Dr. Giora Yaron. It has raised $20m. in two financing rounds from its founders, Norwest Venture Partners, Sequoia Capital and Cisco Systems.
The acquisition includes Qumranet's virtualization solutions, its KVM platform and SolidICE offering, a virtual desktop infrastructure (VDI), which present a comprehensive virtualization platform for enterprise customers.
Under the terms of the deal, the 50 employees at Qumranet's research and development center in Ra'anana will join Red Hat. The R&D center will be used as Red Hat's R&D center in Israel.
The acquisition has advanced Red Hat's efforts to transform the virtualization market and drive comprehensive virtualization technology and management solutions into every system, from servers to desktops, on both Linux and Windows, Red Hat said.
UBS Investment Bank acted as the sole strategic advisor to Red Hat in the transaction.
Whitehurst is expected to make his first visit to Israel next week to take part in the annual conference of Matrix IT Ltd., which has represented Red Hat in Israel.
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