Some time ago, we were asked: “where are all of the open source billionaires?”

Well, let me introduce you to MySQL, the company that Sun Microsystems today bought for $1 Billion.

Why Sun Microsystems Bought MySQL

Sun just got a client list of pretty much the vast majority of Web companies. That is worth a lot. $1 Billion? Sure, why not.

The company commands a $13.3B market cap, but has revenues of $13.9B per year. It was sitting on nearly $4B in cash… so this is a bet to bolster its growth and increase its multiple.

According to this AP story:

MySQL competes with non-open-source offerings from Microsoft Corp. and Oracle Corp., which dominate database software for traditional businesses.

However, MySQL is the rapidly growing market leader in open-source database software, particularly among Web-based companies, where it commands about 80 percent of the global market, according to Sun Chief Executive Jonathan Schwartz.

Microsoft is less than 10 percent of that market, Schwartz said.

“We are really acquiring a database that customers and Web companies across the world have moved to at a breathtaking clip,” Schwartz said in an interview. “The titans of the Web all use MySQL — banks, automobile companies, pretty much all of the Fortune 500 runs MySQL in their shops.”

The acquisition, expected to close in the third or fourth quarter, takes pressure off Sun to spend some of the cash it’s been accumulating. It also bolsters its software offerings with a well-known known name in Internet data retrieval.

“This gives us access to every hot Web company on earth, and every company that will be hot 5 years from now,” Schwartz said. “For us, this is completely landscape-changing.”

We have seen more and more open-source investments of late: ad server OpenAds raised an additional $15.5M in funding and to quote Paid Content: “Red Hat (Linux), Automattic (Wordpress) and Acquia (Drupal) have all set about offering premium options on top of essentially free software”.

It makes sense: organizations use open source free software, but they will invariably need value-added services, and as the Web becomes a bigger force in the broader economy and advertising ecosystem, it’s worth paying up. That, I suspect, is what Sun is betting on.

Sizing up Open Source Projects and Deals

In terms of acquisitions of open-source projects, this is the biggest. But in terms of all open-source projects, it’s worth noting that Red Hat is publicly traded and worth $3.5B. Where does this $1B deal fit in all-time M&A activity?

And to see a comprehensive list of the largest M&As of all time, click here.

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