Why the Red Hat And Jboss Merger Will work

Last week in a move that surprised many people and will create an "open source mega-corp", Red Hat said that it is in the process of acquiring middleware player JBoss for US$350 million in cash and stock. The deal which includes another US$70 million depending on performance metrics is expected to be completed by the end of May 2006.When one studies the merger one realizes why this consolidation is actually a good thing. Rarely do mergers translate into better bottom lines and good sales. However, in this case, the very similar subscription-based business models that both companies use and their open source basis make for an excellent fit, is what most experts looking at the deal are saying.Red Hat is a giant in its field with over $1.1 US billion investments and readily available cash. It dominates the Linux distribution market in corporate circles in terms of uptake. Jboss is well known for its Open Source Java EE-based application server, which is cross platform and works well across practically all known corporate platforms. It is also a growing company whose growth is faster than Red Hat.When you combine the two, it establishes a company that can help you establish a red-hot infrastructure software maker that also happens to be open source.