Buy Oracle Stock? What of Their Red Hat Takeover?

Mar 24, 2009

Rumors of a Red Hat takeover have been circulating since time immemorial. Maybe this time there's some truth to it.

It all began in 2003: Novell buys financially strapped SuSE Linux AG. But their real target even then was Red Hat. Red Hat didn't want to be bought. Comes 2004 and analysts said "Sun, buy Red Hat!" Even better, the rumors in 2005 flew that Microsoft was interested in the Linux distro.

Ever since Oracle set its Unbreakable Linux course in the fall of 2006, speculators have been laying their bets on a Red Hat purchase. At the time, Oracle's CEO Ralph Ellison said in an interview with the Financial Times that his firm was thinking about buying either Novell or Red Hat, but that Red Hat was hardly in their best interests:

"We see in China and India, all that stuff is freely available and Red Hat is just cut completely out of the market. I’m not gong to spend $5bn, or $6bn, for something that can just be so completely wiped off the map. They take all the Red Hat code, have their own equivalent of the Red Hat network, and Red Hat gets zero."

In 2007 the rumor mill again reported that Oracle was to buy Red Hat. In January 2009 analysts came up with an even better plan: Dell should buy Red Hat. And with every speculation Red Hat's stock rapidly rose.

Analysts' assessments at that time maintained that Oracle should wait until Red Hat's stock dips low enough so that it would be easy to snap up. According to a recent ComputerZeitung analyst, that deal is already in the making, although Oracle would probably prefer to wait until IBM's recent talks with Sun resolve themselves, as reported in the WSJ.

The only source of the rumors seems to be U.S. analyst Katherine Egbert of the Jefferies & Co. investment bank. She recently wrote in a Research Note that it would make sense for Oracle to acquire Red Hat. The Boycott Novell people maintain that she "always gets it wrong on Red Hat." We'll see if she hit the jackpot this time.

Related content

  • Oracle Buys Sun Microsystems

    After weeks' long rumor mill, the word is finally out: database specialist Oracle is buying Sun Microsystems for around $7.4 billion. This just two weeks after IBM abandoned its bid to do the same thing.

  • OpenOffice: Future Uncertain

    Florian Effenberger is co-lead of the international marketing project. Our sister publication Linux-Community asked him how the deal between Sun and Oracle would affect OpenOffice.

  • Oracle Lays Off Accessibility Leader

    The leader of the Gnome accessibility team, Will Walker, has until now worked for the Accessibility Program Office from Sun, which after the Oracle take-over melted into the relevant APO at Oracle.

  • Oracle Goes with Own DB, SPARC and UNIX

    In Munich, Wednesday, March 10, Oracle announced its upcoming strategy for the Sun takeover: the new couple will now sell complete packages and, next to Oracle's database, further develop Solaris along with Sun's SPARC and Flashfire server technologies.

  • Novell Offered Takeover Proposal

    Novell is back on the winning side. But investment firm Elliott Associates considers its stock below where it should be. Therefore, Elliott wants to take over the Linux and NetWare firm altogether.

comments powered by Disqus
Subscribe to our Linux Newsletters
Find Linux and Open Source Jobs
Subscribe to our ADMIN Newsletters

Support Our Work

Linux Magazine content is made possible with support from readers like you. Please consider contributing when you’ve found an article to be beneficial.

Learn More