Veteran Linux distribution developer SUSE is going private again as its majority shareholder announced plans to delist the company from the Frankfurt stock exchange.
According to the company, the agreement “will allow SUSE to fully focus on its operational priorities and execution of its long-term strategy.”
SUSE’s majority shareholder, Marcel LUX III SARL, currently owns 79% of the company’s shares.
The offer price per SUSE share to be paid by Marcel was set at €16.00, less the gross amount per share of an interim dividend due to all shareholders. €16.00 represents a premium of just over two-thirds (67%) to XETRA’s closing share price of €9.605 on August 17, 2023.
The company’s stock was closer to €20.00 at the start of the year.
An acceptance period of at least four weeks is planned for the offer and settlement of the offer – if accepted – is expected in the first half of October 2023. An extraordinary general meeting of SUSE will then take place and will result in the delisting of SUSE. Frankfurt Stock Exchange.
Why privatize SUSE?
Aside from a desire to focus on its operational priorities and execution of its long-term strategy, SUSE has given few details about its motivations.
Nader Henein, vice president analyst at Gartner, said ITPro this move would allow SUSE to focus more on development revenue.
By going private, Henein said, “You’re less exposed to market fluctuations, you’re less at the mercy of the whims of the markets. shareholders“.
“A lot of organizations are looking to the private sector to be able to grow, rather than having to manage quarter after quarter and be successful and make money,” he added.
According to the analyst, a public company would likely see its stock price suffer if it announced a significant increase in its development, for example, while a private company was not as beholden to market prices and was not required to make its projects public.
The company also launched into Red Hat Enterprise Linux (RHEL). scandalfirst with plans to invest over $10 million into a fork of RHEL and, more recently, creating the Open Enterprise Linux Association (OpenELA) with Oracle and CIQ.
RELATED RESOURCE
Three steps to transform security operations
Learn how to optimize and automate processes, save your IT security staff thousands of hours, and stay ahead of the latest cyber threats.
The timing of SUSE’s move is therefore interesting, although it is unlikely to be directly caused by the events of the last few months.
However, Henein noted that “the timing of Red Hat’s announcement likely sped up the process.”
That said, the timelines involved in setting up OpenELA and planning the privatization of SUSE were likely parallel and therefore involved a good deal of coincidence.
“Nobody wakes up in the morning and says, ‘I’m going to take this company private,'” Henein said.
The analyst also noted that having two versions of Enterprise Linux – SUSE retains the SLES distribution – could lead to an end-of-life version in the coming years as customers move to the new platform.
“You don’t maintain two Enterprise Linux distributions unless they serve two very different purposes,” he said.
A SUSE spokesperson said ITPro: “SUSE remains committed to SLES.”
SUSE is no stranger to private property entry and exit. It was sold by Micro Focus in a deal worth $2.5 billion, completed in 2019. It was acquired by Novell in 2004.
The company also saw a few months of activity. In May, it appointed a new CEO, Dirk-Peter van Leeuwen, and Ian Halifax as CFO, and Frank Feldmann was hired as CSO in August. Feldmann also served for more than 15 years in various leadership roles at Red Hat.
Although SUSE did not immediately respond to a request for comment regarding its future, one possibility is another public offering after it has had time to regroup and restructure. The advent of OpenELA and the agreement with Oracle could mean a refocusing in the near future.
