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Mandrakesoft Buys Into Support For $500K

Officials at Linux distributor Mandrakesoft announced Thursday an all-stock buyout of Edge-IT, a Paris-based Linux services and support company.

The deal, which still requires shareholder approval, is expected to close in a couple months, with Edge-IT shareholders receiving 70,000 shares of stock on the Euronext stock exchange, or 1.47 percent of Mandrakesoft's outstanding shares. At current rates, the price tag is an estimated at about $500,000.

The Linux developer, based out of Paris and Moreno Valley, Calif., appears to gearing up for an entrance into the business world; the company is known more as a consumer-friendly desktop Linux OS (currently at version 10) than some of the more technically difficult-to-install-and-maintain Linux distributions on the market today.

Gael Duval, Mandrake founder, said he expects shareholder approval within the coming weeks, and also expects integration with the two companies to finish quickly.

"Edge-IT already has a number of corporate clients, so they will continue to work at least with these clients, and new ones," he said. "Operations will full integrate quickly since Mandrakesoft already has a service team which also deals will several corporate clients."

Francois Bancilhon, Mandrakesoft CEO, said in a statement that Edge-IT "will bring to us their extensive knowledge of the corporate market, their strong expertise in delivering support and services and will be a great complement to our service team."

Currently, the Linux distributor makes its software available as a free download for the core OS (usually the next-to-most-current version), and offers a software bundle of applications and OS at a price.

Details are sketchy on the specifics of the merger. According to Duval, Edge-IT's current customer base will still receive support for their Linux problems, but how long the merged company will continue to support competing Linux flavors remains to be seen. Patrice Lallement, CEO of a company with six employees and a customer base located in primarily in France, is optimistic about the acquisition's possibilities.

"We are very happy to join Mandrakesoft; this will allow us to grow more aggressively our corporate business and deliver better services to our current customers," she said in a statement.

Mandrakesoft is the fifth fastest-growing Linux distribution, according to NetCraft statistics of Web servers, well behind Red Hat , Novell's SuSE, Debian and Cobalt, but still in the game.

The acquisition signals the company wasn't just talking when officials sold the French Commerce Court on their bankruptcy exit strategy in March. The question, however, remains how to translate its devoted customer base into revenues. The company has an e-commerce site -- Mandrakeclub -- and forum where Linux ISVs can sell their applications and its bundled OS package to a three-tiered subscription-based membership. With the introduction of business services for Linux networks, Mandrakesoft is looking to expand Edge-ITs practice worldwide and reap a revenue stream of more profitable corporate contracts.