SUSE to become a fully independent business after EQT acquisition

SUSE CEO Nils Brauckmann will continue to lead the company

Enterprise grade Linux operating system maker, SUSE will be acquired by the EQT VIII fund from Micro Focus International plc for an enterprise value of USD 2.535 billion.

SUSE has changed ownership multiple times since it was acquired by Novell in 2003 for $210 million. Novell was in turn acquired by the Attachmate Group for $2.2 billion on 22 November 2010. The Attachmate Group merged with Micro Focus to form the Micro Focus Group in 2014 in a $2.35 billion deal. Micro Focus went on to merge with Hewlett Packard Enterprise’s software business by the end of 2017.

During the ownership of Micro Focus, SUSE has operated as a semi-independent business under the leadership of Nils Brauckmann, executing on a clearly defined growth charter. SUSE has also successfully expanded its product portfolio, including solutions for cloud and storage as well as container and application delivery technology.

“Today is an exciting day in SUSE’s history. By partnering with EQT, we will become a fully independent business,” said Nils Brauckmann, CEO of SUSE.

The company, founded on 2nd September 1992 in Nuremberg, Germany, by Roland Dyroff, Thomas Fehr, Burchard Steinbild, and Hubert Mantel was then named S.u.S.E — German acronym for “Software und System-Entwicklung”, meaning “Software and systems development”. “SUSE” is now a name, not an acronym.

“Micro Focus started working with the SUSE Business in November 2014, following our acquisition of The Attachmate Group. At the time of the acquisition, the SUSE Business represented just over a fifth of the revenues of The Attachmate Group, which we acquired for $2.35 billion,” said Kevin Loosemore, Executive Chairman of Micro Focus. “In the three and a half years since that time we have invested significantly in the SUSE Business. Executing as a separate product portfolio has enabled Nils Brauckmann, CEO SUSE, and the team to deliver against the SUSE Business growth charter.”

SUSE’s solutions range from enterprise Linux to OpenStack private Cloud, software defined distributed storage, Kubernetes container management and Cloud Foundry Platform as a Service.

The company’s main competitors are Red Hat and Canonical’s Ubuntu. In 2018, Red Hat generated revenues of US$2.9 billion worldwide. Canonical Ltd. clocked revenues of US$125.97 million in FY 2017.

SUSE Linux Enterprise 15

Last week, on June 25th the company announced SUSE Linux Enterprise 15, a multimodal operating system that bridges traditional data center technologies with software-defined infrastructure. The SUSE Linux Enterprise 15 platform uses a “common code base” to ensure application mobility across multimodal IT environments.

“Operating systems remain a foundational building block for modern infrastructure. Linux has become a preferred platform for the cloud and for modern cloud-native application development. It has also gained stature as a preferred development platform for most ISVs. Today Linux is widely used for hosting traditional as well as next-generation applications across bare-metal, virtual and container-based delivery methods. SUSE Linux Enterprise comes out at the top for SAP applications, mainframes, high-performance computing and other key Linux enterprise-centric use cases,” said Stephen Belanger, senior research analyst, Computing Platforms at IDC.

“The next chapter in SUSE’s development will continue, and even accelerate, the momentum generated over the last years. Together with EQT, we will benefit both from further investment opportunities and having the continuity of a leadership team focused on securing long-term profitable growth combined with a sharp focus on customer and partner success. The current leadership team has managed SUSE through a period of significant growth and now, with continued investment in technology innovation and go to market capability, will further develop SUSE’s momentum going forward,” said said Nils Brauckmann.

Revenue & Valuation

SUSE generated revenue of $303.4 million in 2017 and $253.8 million in 2016. For the first six months of 2018 (ended 31 October 2017) , SUSE has already reported revenue of $164.4 million.

The enterprise value for the SUSE Business of approximately US$2.535 billion represents an effective multiple of 7.9x revenue and 26.7x Adjusted Operating Profit of the SUSE Business for the twelve months ended 31 October 2017. The SUSE Business has been a distinct reporting segment of Micro Focus since 1 May 2015, and this has remained the case following completion of the HPE Merger in September 2017.

As at 30 April 2018 the SUSE Business had gross assets of US$797.7 million and the headcount dedicated to the SUSE Business was 1,325. Completion of the Transaction is expected in the first quarter of Calendar Year 2019.