EQT eyes potential $6 billion sale of Linux pioneer SUSE, sources say

By Milana Vinn and Amy-Jo ‌Crowley

NEW YORK/LONDON, March 9 (Reuters) - ​Private ​equity firm EQT AB is exploring a sale of open-source software company SUSE in a deal that could value it up to $6 billion (5.1 billion euros), according ‌to two people familiar with the matter.

EQT has hired investment bank Arma ⁠Partners to sound out a group of private equity investors for a possible sale of the company, said the ‌sources, who requested anonymity to discuss ‌confidential matters. The deliberations are at an early stage and there is no certainty that EQT will proceed with a transaction, the sources said.

EQT declined to comment. Arma Partners ​and SUSE did not immediately respond to Reuters' requests for comment.

EQT, already a majority owner of SUSE and based in Sweden, took the company private in 2023, valuing it at ⁠2.72 billion euros ($2.96 billion). A sale at around $6 billion would roughly double that valuation in about two and a half years.

The ​potential deal comes amid a broader selloff in software stocks, which has disrupted mergers and acquisitions activity. Investors are concerned that new artificial intelligence ​tools could displace many existing software products, weighing on ‌technology valuations and making deals harder to price.

Some investors, however, see Luxembourg-headquartered SUSE as a potential beneficiary of AI adoption, arguing that demand for ⁠enterprise-grade infrastructure software is likely to grow as companies build and deploy more AI applications.

The company generates about $800 million in revenue and more than $250 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) and ⁠could fetch between $4 billion and $6 billion in a sale, the sources said.

SUSE is a German acronym for “Software und ​System-Entwicklung” or software and systems development. Three students and an engineer founded the company in 1992: Roland Dyroff, Thomas Fehr, Hubert Mantel and Burchard Steinbild. It holds the distinction of being the world’s first provider ‌of an enterprise Linux distribution.

SUSE is an enterprise software company whose open-source products help businesses run applications on cloud servers, mainframe computers, and ‌devices at the edges of networks. Its customers include Walmart, Deutsche Bank and Intel, according to its ⁠website. More than 60% of the Fortune ‌500 rely on SUSE to ​power some of their workloads, according to the company.

(Reporting by Milana Vinn in New York and Amy-Jo Crowley in London; Editing by Echo Wang and ‌Lisa Shumaker)

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