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Press release

Cygnus Solutions Merger Snapshot

RALEIGH, N.C.

 

The News:
A definitive merger agreement signed between Red Hat, Inc. (Nasdaq: RHAT) and privately-held Cygnus Solutions on Monday, November 15, 1999.
What the Merger Will Create:
The merger will make Red Hat the largest company in the world dedicated to providing open source technology, information and services, offering an end-to-end spectrum of open source software and support for enterprise servers, the Internet and embedded and post-PC-centric computing.
Terms of the Merger:
The $674 million transaction (based on Red Hat's closing price on Friday, November 12) will be completed in a stock for stock merger in which Red Hat will issue up to 6,624,344 shares for all of the outstanding securities of Cygnus. The acquistion will be accounted for under the pooling of interests method, is expected to close in January 2000 and is subject to approval from Cygnus' shareholders.
Management:
Matthew Szulik, currently the president of Red Hat, Inc., will lead the combined companies as president and CEO. Bob Young, currently chairman and CEO, will be chairman of the combined entity. There are no additions to Red Hat's board of directors.
Employees:
Red Hat, Inc. currently has 235 employees worldwide. Cygnus Solutions currently has 181 employees worldwide. There are no plans for a reduction in the company workforce as a result of the merger.
Locations:
Cygnus is based in Silicon Valley (Sunnyvale, Calif.). Red Hat's corporate headquarters in Research Triangle Park, NC will be the worldwide headquarters for the combined companies. In addition, Red Hat and Cygnus have offices in Europe, Japan, Asia and Canada.
About Red Hat, Inc.
Red Hat (Nasdaq: RHAT) is based in Research Triangle Park, NC and is the market leader in Linux and open source software solutions and services. The company, which completed its IPO in August, offers both its award-winning open source Red Hat Linux OS and a full line of services, including telephone support, on-site consulting, developer training, certification programs and priority access updates. Red Hat partners include major computing industry leaders worldwide. Additional facts on Red Hat are available at www.redhat.com.
About Cygnus Solutions
Based in Sunnyvale, Calif., Cygnus Solutions is a leader in innovative open source technology, including comprehensive development software and support solutions for today's Linux applications and tomorrow's post-PC-centric devices. Additional facts on Cygnus are available at www.CYGNUS.com/about/index.html
Facts on Linux, Open Source and Post-PC Markets
Linux was the fastest-growing server operating environment in 1998, growing more than 190 percent in that year alone and capturing more than 15.8 percent of the 4.4 million revenue shipment server operating systems market segment. Red Hat Linux is by far the most popular distribution, preferred by 68.7 percent of U.S. Linux users. By 2002, it is estimated 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. Source: IDC Research.
Press and Industry Analyst Contact:
Any member of the Schwartz Communications team at (781) 684-0770 or redhat@schwartz-pr.com can arrange interviews with media and industry analysts.
Investor and Wall Street Analyst Contact:
For investor inquiries, contact Lippert/Heilshorn at (212) 838-3777.

LINUX is a trademark of Linus Torvalds. RED HAT is a registered trademark of Red Hat, Inc. All other names and trademarks are the property of their respective owners.

About Red Hat

Red Hat is the world’s leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT. Learn more at http://www.redhat.com.

Forward-looking statements

Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to delays or reductions in information technology spending; the effects of industry consolidation; the ability of the Company to compete effectively; the integration of acquisitions and the ability to market successfully acquired technologies and products; uncertainty and adverse results in litigation and related settlements; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; risks related to data and information security vulnerabilities; ineffective management of, and control over, the Company’s growth and international operations; fluctuations in exchange rates; and changes in and a dependence on key personnel, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission’s website at http://www.sec.gov), including those found therein under the captions "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations". In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. The forward-looking statements included in this press release represent the Company’s views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.