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Red Hat's bonds raise $600m

Stephen Shankland CNET News.com

Published: 13 Jan 2004 10:35 GMT

Linux seller Red Hat raised $600m (£324.25) on Monday through a bond offering, bringing its cash reserves to about $1bn.

The company announced a plan last week to sell $400m of the bonds, but when they were priced on Tuesday, there was demand for $500m worth, Red Hat said. Then the company exercised an over-allotment program to bring the total to $600m, Red Hat spokeswoman Leigh Day said

The money will be used for acquisitions and international expansion, the company said in a statement.

Red Hat is the leading seller of Linux, an open-source operating system modelled after Unix. However, it faces stronger competition with Novell's acquisition of No. 2-ranked SuSE Linux.

Novell brings to SuSE cash, server software products, a stronger US presence and existing customer relationships.

Red Hat's new cash should help the company "broaden its global footprint at a faster rate and to be more productive in adding technology layers to its product offering," Sameer Nadkarni, a WR Hambrecht securities analyst, said in a research report. He expects Red Hat will acquire smaller companies such as those focusing on security, application-server software and virtualisation of computing resources.

Red Hat acquired one such company, storage management software maker Sistina Software, in December.