After the Cambridge, UK company had been pursued by several unwanted suitors, Santa Cruz Operation Inc yesterday stepped in and took high-flying IXI Ltd out of the loop. No cash changed hands and the friendly acquisition was completed by a share exchange arrangement between the two privately held firms under US accounting rules. Marriage between Unix-on-Intel house Santa Cruz and the British graphical front-end specialist was supported by all shareholders on both sides – including Santa Cruz board member Microsoft Corp – and blessed by by IXI’s OEM customers, which include Compagnie des Machines Bull SA, Digital Equipment Corp, IBM Corp, ICL Plc, NCR Corp, NEC Corp and Unisys Corp. Observers positioned the acquisition as a logical match, and – following Novell Inc’s planned acquisition of Unix System Laboratories Inc – evidence of further consolidation in the Unix industry, this time around the desktop. IXI will remain intact as an Santa Cruz subsidiary, and is to take over some responsibility for the development of Open Desktop, Santa Cruz’s graphical operating system bundle, which has yet to deliver in the manner it hoped. IXI is expected to use other Santa Cruz technologies for new groupware and tools that will roll into its pervasive Motif-based X.desktop manager, for which 250,000 users are claimed. The IXI offices in San Ramon, California; Minneapolis, Minnesota; and Tokyo, will remain open. Full details of the transaction were not disclosed, but IXI shareholders, which include a number of employees, plus investors like Tomen Electronics Co in Japan and Hermann Hauser, have exchanged their holdings for newly-issued Santa Cruz common stock. Major IXI shareholder, founder and chairman Ray Anderson, gets a significant stake in Santa Cruz and takes a vice-president post at the company, reporting directly to recently appointed Santa Cruz boss, Lars Turndal. Anderson remins managing director of IXI and gets a position on Santa Cruz’s new management committee, while Turndal and other Santa Cruz executives take seats on the IXI board. IXI will add more to the value of Santa Cruz than the dilution of the shares involved, according to Anderson. And in a clear reference to Santa Cruz’s well-publicised drive towards a flotation in the US, he said the acquisition will provide a faster route to liquidity for IXI shareholders. Five-year-old IXI, with 50 employees, turned over UKP3.5m, $6m, last year and has a healthy UKP2m in the bank. Santa Cruz reported $160m of business in the year-end to September 30 and has 1,110 staff. IXI said it had been courted by several other firms, but decided some months ago to offer itself to its OEM partner. Indeed on his appointment as Santa Cruz chief a few weeks ago, Turndal said the firm would be acquiring additional system software technologies and utilities from outside (CI No 2,111). The company is now expected to do versions of its iAPX-86 soft ware for RISC architect ures. Insiders say the issue of new Santa Cruz stock will not dilute the existing shareholdings sig nificantly: former presid ent Larry Michels has 16%, his son and current chief technology officer Doug, holds 20%, Microsoft has 16%, employees own 22% and other investors have 26%.
