VA Linux Acquisition Creates Major Information Destination

by David Penn

Just when the tide was shifting from an obsession with Linux proper to the obsession with the embedded systems possibilities Linux offers, along comes a little, good old-fashioned merger/acquisition announcement to return us wistfully to those heady, market-obsessed days of, well, last year.

VA Linux Systems' announcement that it has acquired Linux/open source information and development depot for about $813 million in stock and cash, is being touted as "the most significant transaction in Linux history" by some--and the claim is worth arguing over. VA Linux Systems already owns, an open source development project directory and repository, and, by adding such Linux/open source sites as Slashdot and Freshmeat, the corporation has set itself up as a premier source not only for information about Linux, but also for the very tools, applications and projects that will help Linux gain wider use and acceptance in the software development community.

Under the terms of the agreement--already approved by both companies' boards of directors--each share of common stock will be exchanged for .425 of a share of VA Linux Systems common stock. VA Linux Systems will also pay an additional $60 million in cash.

"This acquisition moves VA Linux forward on the path to being the biggest name in Linux and Open Source," said Larry M. Augustin, founder, president and CEO of VA Linux Systems. "With our purchase of, we can offer the development community better infrastructure for Open Source development, and expand the range and effectiveness of solutions available to our customers."

Among the goals of the acquisition, according to statements released today, are the following:

  • To accelerate the long-term model of VA Linux's web and service businesses, reinforcing VA's position as a leading Linux and Open Source solutions company.

  • To consolidate the complementary networks of VA (including,, and and (including and to create the Internet's leading destination for Open Source developers, with nearly two-thirds of the total traffic of major Open Source sites and putting the combined network in the top 100 web destinations worldwide.

  • To coordinate the activities of the leading web sites for Open Source development projects.

  • To increase the opportunity for sponsorships and business partnership revenues across the Company's network.

  • To expand the range of VA Linux's products and services, such as the announcement last week of consulting to Hewlett Packard's Printer Division in their Open Source software plans.

  • To combine the companies' teams, building next-generation services and e-commerce infrastructure for faster time-to-market.

  • To integrate teams that have worked cooperatively within the Linux community culture over several years, initially as volunteers in the Open Source world, and recently in the building of the next generation of developer infrastructure.

Said CEO, Bruce Twickler: " and VA are a perfect match. We both believe in the future of Open Source. We both believe that live software communities on the Net are more important than packages that ship once every three years and companies that simply intermediate between developers and users."

VA Linux Systems, which trades under the symbol "LNUX" on the Nasdaq market, has seen its stock price decline fairly steadily since its record-breaking IPO. (Shares of LNUX are down nearly 60% from their 52-week high of $320.), trading as ANDN on the Nasdaq, also has seen its share price cut nearly in half from its IPO-era, 52-week high of about $90 per share. (Shares of ANDN were trading at around $45 7/16 as of Thursday, and were up 9 7/16 points as news of the merger broke.

Of course, one of the biggest questions about the deal is: will Slashdot retain its editorial independence? While it is an interesting speculation to imagine Slashdot being pilloried for selling out, the prospect of Slashdot becoming anything much different from the Great Geek Gabfest it has become is highly unlikely--mostly due to the structure of the site itself. What makes Slashdot worth visiting is, like Linux, the loosely-defined Slashdot community, which consists largely of know-it-alls, wiseguys, informed-yet-nonetheless-anonymous cowards, and an even greater host of folks looking for second, third and fortieth opinions on much of the biggest tech/science stories of the day. A quaint little "VA Linux" corner on Slashdot would be, to put it mildly, rounded out in less time that it takes to type "$lashdot&quot.


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