I must admit I was surprised that Red Hat wound up acquiring JBoss today.
The announced price is $140 million cash and $210 million in Red Hat stock, plus up to another $70 million in cash and stock should JBoss meet some performance targets.
The deal keeps JBoss head Marc Fleury in charge at the company he founded, but does put him closer to the IBM orbit than previously. Is today his new "best day ever?" He can now buy that steak joint we ate at last summer, but mergers, unlike other business agreements, take a while to digest.
For Red Hat, it's an important move away from commodity Linux and towards the Service Oriented Architecture (SOA) area, where JBoss' Java-based middleware is an important component. JBoss gets to go public without filing any paperwork.
I'm guessing that Fleury gets a good deal of autonomy here. His business model has been to rely heavily on some "star" programmers who each carry heavy responsibility, which differs greatly from the way Red Hat operates. (Quick, name a Red Hat programmer.) Forrester thinks this means Red Hat will next go after a database outfit (mySQL?) Red Hat stock rose in value after the annoucement by 9%. (Technically that puts JBoss another $19 million to the good, but all good deals have lock-up provisions, during which you can't sell your stock.)
My personal opinion? Either this deal will blow up in Red Hat's face or Fleury just bought Red Hat. Losing JBoss' stars would be like losing the company, and that is leverage he can use to keep the Red Hat suits off his back going forward. If he executes, he'll gain enough in resources and revenues to essentially be in charge, assuming that's what he wants. It's happened before.
For Red Hat, too, a lot depends on how they handle Fleury and his team. This could be a very good strategic fit, and bring a lot of good new perspective to the party. Or it could kill Red Hat.
Mergers are a lot like marriages in that way.