BUSINESS WIRE: Red Hat completed the acquisition of privately-held C2Net Software, the developer of the Apache-based Stronghold secure web server. C2Net's Stronghold, which is available for many operating system platforms, is the most popular commercial SSL Web server on the Internet with more than 30 percent of the secure web server market.

The transaction was valued at approximately $42.7 million based on an average closing price of Red Hat's common shares for a seven-day period ended August 16, 2000. Under the terms of the transaction, Red Hat issued 1,992,877 shares of Red Hat common stock in exchange for all of the outstanding securities of Oakland, California-based C2Net. The acquisition has been accounted for as a purchase.

Red Hat continues to broaden its product offerings to provide a single source of complete Internet infrastructure solutions for its enterprise customers. C2Net is the fifth major acquisition for Red Hat in 2000 following the acquisition of: (1) WireSpeed, a leading developer of network and telecommunications software that helps connect a new generation of post-PC and embedded devices to the Internet and secure Web servers like Stronghold; (2) Bluecurve, whose performance management solutions allow organizations to simulate and measure user activity and demands placed on the Internet infrastructure and applications; (3) Hell's Kitchen Systems, Inc. (HKS), a provider of e-commerce payment processing software critical for any company trying to conduct business on the Web; and, (4) Cygnus Solutions, a top provider of a wide variety of software, tools, services and developer support for servers, real-time operating systems (RTOS) and embedded, post-PC platforms.

Open Source Momentum
International Data Corp. (IDC) research states that paid Linux shipments grew faster than any other server operating system over the past two years, and their preliminary figures for 1999 show Linux shipments hold 24.6 percent of the server operating system market, up from 15.8 in 1998. IDC also states that Red Hat holds 50.2 percent of Linux vendor market share and that Red Hat Linux is by far the most popular distribution, preferred by 68.7 percent of U.S. Linux users.

Research firm Netcraft, Inc. (www.netcraft.com), states that as of May 2000, 36 percent of all public Web sites run on Linux-based operating systems, making Linux the most popular choice for deploying public Web sites. IDC research shows 40 percent of all spending on Linux servers is for Internet related applications, firmly entrenching Linux servers in the Internet infrastructure.

Finally, IDC predicts that by 2002, there will be more than 55 million handheld and notebook-style information appliance devices and that by 2005, shipments of these appliances will exceed shipments of PCs.

Red Hat's numerous alliances with industry leaders and the demand for Linux-based applications has created open source support from many of the industry's leading software and hardware manufacturers, including Dell, Compaq, Computer Associates, Hewlett-Packard, IBM, Intel, Netscape, Novell, Oracle and SAP.