Open-source enterprise software giant SUSE Group today said it has completed the acquisition of Kubernetes management startup Rancher Labs Inc.

The deal should put SUSE in a better position to take on rival IBM Corp.’s Red Hat in the fast-growing Kubernetes market, and it may also help it on its way toward its goal of doubling its revenue by 2023.

Germany-based SUSE is the maker of one of the industry’s most widely used enterprise distributions of Linux. The SUSE Linux distribution runs in enterprise public cloud deployments, in private data centers and on edge systems. In addition, the company also sells products higher up the stack, such as container management tooling.

Rancher Labs has created a platform that makes it easier for companies to set up and manage large Kubernetes environments. Kubernetes is open-source software that’s used to manage large numbers of containers, which host the components of modern software applications. Rancher makes its money by providing professional services and support to enterprises and claims that its platform is used by more than 30,000 engineering teams worldwide to power their Kubernetes container deployments.

The financial terms of the deal, announced in July, were not disclosed, but SUSE reportedly paid $600 million to $700 million to buy Rancher.

The acquisition will enable SUSE to challenge Red Hat’s OpenShift platform in the Kubernetes management space. Red Hat is an old rival of SUSE, since it makes another popular open-source Linux distribution that’s widely used by enterprises, but in recent years it has gotten ahead with its focus on Kubernetes. Buying Rancher Labs potentially levels the playing field, giving SUSE a ready-made Kubernetes management platform of its own.

“This is a union that brings together the best in Kubernetes management, Linux and edge computing to address the needs of all customers seeking to grow their business and out-innovate their competition,” SUSE Chief Executive Officer Melissa Di Donato wrote in a blog post today.

Sheng Liang, Rancher’s former CEO and now SUSE’s president of engineering and innovation, said in a July interview with SiliconANGLE’s Media’s livestreaming studio theCUBE that his company’s platform provides some unique capabilities for enterprise Kubernetes users.

“Red Hat did a lot of good things for open source, for Linux, for Kubernetes,” Liang said. But he added that “we don’t believe OpenShift by itself actually solves the kind of problem we’re seeing with customers today. That’s why, with as much investment that has gone into OpenShift, we just see no slowdown. In fact, we see an acceleration of demand for Rancher.”

Besides taking on Red Hat, SUSE has set itself an aggressive revenue target that it aims to reach by 2023. Di Donato told SiliconANGLE’s video studio theCUBE in May that she’s hoping to double the company’s sales in that time frame, from “just under half a billion to a billion in revenue.”

It’s not clear how much revenue Rancher will add to SUSE, but the company had been growing fast prior to the acquisition, doubling its customer count in 2019 and increasing sales by 169%. Liang told theCUBE that his company had been very “cash-efficient,” spending only about a third of the $95 million in venture capital it had raised before SUSE made its move.

Here’s more from Liang:

Image: SUSE