Red Hat, which sells Linux operating system software, said it will fold Hell's Kitchen Systems' (HKS) e-commerce payment processing software into its offerings. Linux is an open-source operating system based on Unix and available for free or very low cost from several companies.
Under the terms of the deal, Red Hat said it will issue up to 398,335 shares of its common stock to buy all the outstanding shares of HKS. Based on Red Hat's closing price of $215 yesterday, the stock transaction is worth about $86 million.
"Red Hat's global reach and brand recognition delivers HKS' e-commerce software to the open source servers running the world's Internet infrastructure," Red Hat chief executive Matthew Szulik said in a statement. "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."
With the acquisition, Red Hat said it is moving forward on its strategy to expand into areas such as consulting and technical support services.
In November, Research Triangle Park, N.C.-based Red Hat bought software company Cygnus for $674 million, giving Red Hat an entree into "embedded" devices, machines whose inner workings such as operating systems and hardware usually are hidden from the person using it. In the past, Red Hat has focused chiefly on the server market.
In addition, Red Hat said it will bundle HKS' credit card verification system software with its Red Hat Linux operating system, providing users with an e-commerce server and services product for their Web business.
Pittsburgh, Pa.-based HKS provides software and services to more than 150 ISPs, online merchants and financial institutions, Red Hat said. The combined company will continue to serve customers from both companies.
The HKS acquisition will be accounted for as a purchase transaction and is subject to regulatory approval by HKS shareholders and other closing conditions, Red Hat said.