Is Red Hat ready to go on another buying spree?
Red Hat is raising $700 million in new capital with $400 million of that targeted for a stock repurchase plan.
The rest of the capital is to be set aside for possible acquisitions and other “general corporate practices,” the company says.
Red Hat has made two acquisitions recently: FeedHenry and Inktank.
Red Hat (NYSE: RHT) disclosed the fund-raising after the markets closed Tuesday. The news triggered a spike in its share price in after-hours trading of about a $1 per share.
“With the convertible senior notes, we are opportunistically raising capital for share repurchase and to enhance our strategic flexibility to grow the business,” said Red Hat’s Stephanie Wonderlick, the director of corporate communications.
The capital will be raised through convertible notes, which will come due in 2015.
Red Hat is working with Goldman Sachs, Morgan Stanley, BofA Merrill Lynch, Citigroup, J.P. Morgan, Barclays, RBC Capital Markets and Wells Fargo Securities on the offering.
There is a $105 million overallotment option, noted financial news site SeekingAlpha.
The Raleigh-based company, which is a global leader in Linux open source software and services as well as cloud computing, reported some $1.32 billion in cash and investments at the end of August. It also reported no debt.
Red Hat already has a stock buyback plan in place.
Shares have rallied this year to a high of $62.54 on Aug. 19. RHT low over the past 52 weeks is $45.74.
