Updated from 7:03 a.m. EST
VA Linux Systems
, a developer of systems tailored to the Linux operating system, announced Thursday the acquisition of
, an open source software company, in a cash and stock deal valued at $872.5 million.
Under the terms of the deal, each share of Acton, Mass.-based Andover.Net common stock will be exchanged for 0.425 of a share of VA Linux common stock, reduced by an aggregate of $60 million in cash payments to Andover.Net shareholders.
Andover.Net, which has 15 million shares outstanding, closed at 36 on Wednesday, after gaining 7 1/8, or 26%. VA Linux closed up 29, or 27%, at 136 7/8. (Andover.Net closed Thursday up 9 1/8, or 25.4%, at 45 1/8. VA Linux closed down 8 7/8, or 6.5%, at 128.)
VA Linux of Sunnyvale, Calif., said the deal was expected to be completed during its third fiscal quarter and will be accounted for as a purchase. The acquisition is expected to be accretive to revenue and gross margins this year.
"This acquisition moves VA Linux forward on the path to being the biggest name in Linux and open source," Larry Augustin, president and CEO of VA Linux, said in a statement.
"With our purchase of Andover.Net, we can offer the developer community better infrastructure for open source development and expand the range and effectiveness of solutions available to our customers."
Linux is considered a potential rival to