OREM — Caldera Systems has announced it plans to buy two units of The Santa Cruz Operation Inc. in a deal worth about $129 million.
Caldera, a maker of software and training systems for users of the Linux operating system, will form a new holding company, Caldera Inc., to acquire the Santa Cruz, Calif.-based company's server software and professional-services divisions.
The new company will be based in Orem.
"This is an industry shaking, changing, molding event," said Ransom Love, president and chief executive officer of Caldera Systems, in a conference call Wednesday.
Caldera will have exclusive distribution rights for SCO's OpenServer product line.
The California company produces Unix software. Linux is a Unix variant created by Finnish college student Linus Torvalds. Caldera is among a number of companies that sell Linux packages on CD-ROM.
SCO's stock collapsed this year, falling from a 52-week high of $35.83 to less than $5 a share. The plunge came after the company reported sharply lower sales in its first quarter, in part due to growing popularity of Linux.
The deal will allow both companies to emerge stronger and more focused in their chosen missions, said Doug Michels, chief executive officer of SCO.
Under the agreement, which is subject to approval from shareholders of both companies and from regulatory agencies, SCO will be paid $7 million in cash and receive a 28 percent stake in Caldera Inc., an estimated
17.5 million shares. The stock part of the deal, which does not involve a set stock price, is valued at about $122 million based on Caldera's closing share price of $6.94 on Tuesday.
SCO will keep its Tarantella division, which provides Web-enabling software for network computing. SCO also keeps intellectual property rights and about half the revenue from its OpenServer line. The company reported $11.1 million in OpenServer revenue during the third quarter of this fiscal year.
The companies expect to complete the transaction in October. Love will become CEO of the new company. David McCrabb, president of the SCO server software division, will become president and chief operating officer.
The acquisition would give Caldera access to a large sales network, industry analysts have said.
Caldera, which has about 200 workers, expects to maintain SCO offices without relocating employees to Utah. SCO employs about 900 people worldwide.