Red Hat to Buy E-commerce Software Maker Hell's Kitchen Systems

Red Hat Inc., the reigning Linux distribution in the U.S., announced today that it has agreed to acquire Hell's Kitchen Systems, Inc., developers of e-commerce processing software, for over $85 million in stock.

Said Red Hat CEO Matthew Szulik about the acquisition: "Red Hat's global reach and brand recognition delivers HKS' e-commerce software to the open source servers running the world's Internet infrastructure. The acquisition of HKS is another key addition to Red Hat's strategy to create a next-generation software company spanning powerful servers, Internet infrastructure and pervasive, post-PC-centric computing platforms."

According to published reports, Red Hat will issue just under 400,000 shares of common stock to buy out all outstanding shares of Hell's Kitchen Systems, a private company. Based on Red Hat's Tuesday closing price, the stock deal is valued at about $85.6 million.

Hell's Kitchen Systems' main product is CCVS, a credit card verification system used by hundreds of merchants and merchant-application service providers. CCVS uses a computer to simulate a credit card swipe box (or "point of sale" terminal), allowing merchants to conduct their own payment processing. According to Red Hat, Hell's Kitchen Systems' CCVS software will be bundled with the Professional Edition of its Red Hat Linux operating system.

With Linux as its primary platform, Hell's Kitchen Systems' products are a good fit for a Linux distribution looking to add serious e-commerce options. Over 70% of HKS' customers are Linux operators, and HKS has been committed to making its products support a wide variety of Linux distributions including Red Hat, Caldera, Debian/GNU, SuSE, Linux PPC, Yellow Dog, and Corel's NetWinder. HKS' CCVS is widely regarded as the only credit payment-processing system developed specifically for the Linux operating system.

Hell's Kitchen Systems, Inc. (HKS) began six years ago in the Hell's Kitchen area of Manhattan, New York. In Pittsburgh since 1997, HKS has used Linux for product development and payment processing, as well as for internal purposes such as HKS' own web server, database server, and mail gateway. A profile of Hell's Kitchen Systems, Inc. appeared in the December 1999 issue of Linux Journal.