Mandrakesoft makes acquisition

French Linux vendor Mandrakesoft is to acquire its Brazilian counterpart Conectiva, the French vendor announced on Thursday.

Conectiva, founded in 1995, employs 60 people and has offices across Brazil. The company's customers including Brazilian retail group Casas Bahia, insurance company Generali and the Brazilian armed forces.

Mandrakesoft is to acquire all of Conectiva's shares in a €1.79m all-stock deal. The French Linux vendor said the acquisition is expected to significantly increase its size and R&D capabilities.

Unlike rival Linux vendor Novell, which recently announced that it was disappointed with sales of its Linux offering despite reporting healthy financials, Mandrakesoft has shown significant growth over the last two years. It filed for bankruptcy protection from creditors in January 2003, which it exited last year and later announced its highest profits ever.

The consolidation will help give the combined company more heft, though Mandrakesoft co-founder Gael Duval has tempered his initial expectations.

"This won't elevate us to the status of Red Hat or Novell/SuSE yet, of course, but this is a significant growth for us," Duval said in an email. Further growth plans include an expansion to woo small and medium-size businesses in the United States, he said.

More acquisitions are possible. "We need still more organic growth and external growth -- more acquisitions," Duval said.

Over the last year, the company has struck a number of high-profile deals with the French government, including a contract with the French Ministry of Equipment to replace 1,500 Windows NT servers with Mandrakelinux corporate servers. It is also part of a consortium which won a three-year €7m contract with French Ministry of Defence to build a secure version of Linux.

CNET News.com's Stephen Shankland contributed to this report.