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28 February, 2005
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Mandrakesoft To Acquire Conectiva

Overview of the Mandrake-Conectiva Acquisition

Mike Angelo -- 28 February 2005 (C)

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Under the terms of the GNU General Public License (GPL), the GNU-Linux operating system is free and open source software (FOSS) and no one can charge for it. However, Linux companies such as MandrakeSoft, Conectiva, Novell, Red Hat, SUSE, and others that add to the basic GNU-Linux OS may charge for the added value and for distributing the GNU-Linux OS. They also can charge for services such as product support, documentation, and so forth.

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Two well-known Linux companies, Mandrakesoft (stock symbol MDKFF) and Conectiva, announced plans Thursday for Mandrakesoft to purchase Conectiva for $2.3-million US ($1.79-million EUR) in stock. Mandrake's acquisition of Conectiva strengthens Mandrake's position among the top-tier Linux distribution providers.

Both Mandrake and Conectiva develop, maintain, and sell GNU-Linux distributions. GNU-Linux is a major computer operating system, along with BSD, Mac OS X, Unix, and Microsoft Windows.

However, unlike Mac OS X, Unix, and MS Windows, GNU-Linux is open source and free software. Mandrakesoft and Conectiva grab the free GNU-Linux OS, tweak it, and then add a collection of applications to produce a package known as a Linux distribution. Please see About Linux Distributions in the right sidebar.

While in a financial sense Mandrakesoft is acquiring Conectiva, organizationally it is more in the nature of merger of two companies with common goals, similar infrastructures, and comparable products -- but different geographical markets.

In an e-mail discussion about the Conectiva acquisition with MandrakeLinux founder, Gaël Duval, we mentioned: We are going to call it an acquisition in our story. Do you have any comments about that?

Gaël Duval: Technically speaking, and in the organisation field, it's like a merger since both companies are approximately the same size. But you're right since - financially speaking - it's an acquisition of Conectiva by Mandrakesoft.

As you read through this article, the excerpts from the acquisition press release, and the ensuing telephone press conference, which MozillaQuest Magazine attended, you will notice this spirit of organizational merger. For example - - -

According to a 24 February 2005, joint, Mandrakesoft and Conectiva press release:

This acquisition is expected to increase significantly Mandrakesoft's size and R&D [research and development] capabilities. . . . Both Mandrakesoft and Conectiva are profitable companies. The resulting corporation will benefit from several synergies by sharing development resources, commercial prospects and larger economies of scale, resulting in improved development potential for both companies.

That sounds more like a partnership for common product development and marketing rather than an acquisition or a merger for that matter.

CEO François Bancilhon Outlines Mandrake-Conectiva Plan

At a telephone press conference attended by MozillaQuest Magazine, Thursday, Mandrakesoft CEO, François Bancilhon, promised Mandrake-Conectiva will maintain its strong commitment to free and open source software (FOSS) and will continue providing a free version of its Linux Distribution. Although no name for the after-acquisition company has been articulated specifically, François Bancilhon referred to the after-acquisition company as Mandrakesoft-Conectiva during Thursday's press conference.

François Bancilhon also promised to maintain Mandrake-Conectiva as a world-class Linux distribution provider and to expand Mandrake-Conectiva's worldwide presence. And he promised that Mandrake-Conectiva would continue its strong investment in technology.

The combined company, Mandrakesoft-Conectiva, will have quarterly revenue in the 2-million Euro range. We will have about 130 people -- 70 of them engineers. It will have some of the best software engineers and technology in the world. It will be the leading distribution editor in Europe and South America.

We want to re-emphasize the principle which lead our strategy to now, and that we will keep. First of all, full compliance to the principle of open source meaning that everything we develop and distribute is in GPL, and that we provide and maintain a free version of our product.

Second, we will maintain a strong investment in technology to bring great products to our users.

And finally we will maintain a world-wide presence that we plan to expand.

Jaques Rosenzvaig, Conectiva CEO added:

We here at Conectiva are very excited about the potential for growth and about the opportunity to work with the Mandrake team. We now are part of an organization that is [fielding?] a world-class Linux Company.

Mandrake-Conectiva plans to maintain its strong support for KDE and desktop Linux. It also will support the server/enterprise side of the OS market.

At the 24 February press conference, this writer asked: Mandrake has been very supportive of KDE, is this going to continue?

François Bancilhon replied: This will continue, absolutely.

NewsForge's Joe Barr asked: Will the combined firm lean toward either the desktop or the server or do both?

François Bancilhon: We are going to be a Linux company providing full solutions to consumers and enterprises, which means we will continue what we have done both on the Mandrakesoft and Conectiva side of having very strong desktop solutions and extremely efficient server solutions.

Plans call for the combined Mandrake-Conectiva company to merge their products over time.

At the February 24 press conference, NewsForge's Joe Barr asked: When will the first joint offering be available and what will it be called?

François Bancilhon replied: The plan is to look at the great technology we have on both sides and to do a convergence product that will benefit from both of the features of the existing distributions. The plan is to be able to put that on the market before the end of this year . . .

As far as the name is concerned, we are working on the name and that will be announced, probably within a month.

Paris will be the headquarters for Mandrake-Conectiva. However, plans are to have Mandrakesoft's Conectiva counterparts in Brazil well-integrated into Mandrake-Conectiva product research and development and in business development strategies.

Responding to a question about Mandrake-Conectiva's infrastructure from Geek.com's Brian Osborne, François Bancilhon stated:

The headquarters and the main management of the company will be in Paris . . . We do not however view the team in Brazil as just a local team but we view them as a team that is going to participate in the global development of the company and R and D will be distributed. Services will be distributed . . . We trust the team in Curitiba in Brazil to help us develop the business and strategize.

  • See Mandrake-Conectiva Demographics and Financials
    on Page 2 ----->

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