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Red Hat Is Acquiring Cygnus

November 15, 1999

RESEARCH TRIANGLE PARK, N.C. (AP) _ Red Hat Inc., a distributor of Linux computer operating systems that compete with Windows, is acquiring Cygnus Solutions for $674 million in stock.

Cygnus, based in Sunnyvale, Calif., makes development tools that enable software to mesh with Linux, an increasingly popular platform for running the powerful computer servers that companies use for e-commerce, Web sites, internal networks and databases.

The deal announced Monday is the first major acquisition by Red Hat since its hugely successful initial public offering of stock about three months ago.

Red Hat, based in Durham, N.C., has led a charmed life since the IPO, and will be using its richly priced stock to acquire the privately held Cygnus.

After selling for $14 a share in early August, the stock jumped as high as $135 in the first few weeks of trading. The stock soon retreated below $100, but has rallied over the past week following a judge’s ruling that Microsoft abused the monopoly power of its Windows operating system.

On Monday at 4 p.m., Red Hat was up $3.56 1/4 at $105.37 1/2 on the Nasdaq Stock Market.

``Cygnus has enormous experience and technology leadership in software development and embedded platforms,″ said Red Hat president Matthew Szulik. ``The merger will create a single, worldwide source that lets developers rapidly create Linux applications for servers and small devices _ accelerating the adoption of open source technologies in enterprises worldwide.″

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