Novell to Buy Linux Developer SuSE

Business software maker Novell Inc. said it would buy Linux software developer SuSE Linux of Germany for $210 million, boosting the U.S. company’s hold on corporate networks and sending its shares up 21%.

Novell, based in Provo, Utah, also said IBM Corp., a major backer of Linux software, planned to make a $50-million investment in Novell convertible preferred stock, giving IBM a 2% stake in Novell, executives said.

The SuSE deal follows Novell’s $40.3-million acquisition in August of Ximian, a tiny Mexican developer of desktop Linux software.

Nuremberg, Germany-based SuSE, with annual revenue about $40 million, is Europe’s leading distributor of Linux, a family of software that gives developers open access to its underlying code. The closely held company ranks second among independent distributors of Linux behind Red Hat Inc. of Raleigh, N.C.

Shares of Novell soared as much as 45% to $8.80 before settling back to close at $7.33 on Nasdaq, up $1.28, or 21%.