NEW YORK (Reuters) - Novell Inc., a business software maker, said Tuesday it will acquire Linux software developer SuSE Linux AG of Germany for $210 million in a major expansion of its Linux strategy, sending its shares up 33 percent.

Novell, based in Provo, Utah, also said International Business Machines Corp. (IBM: down $0.32 to $89.36, Research, Estimates), a major backer of Linux software, plans to make a $50 million investment in Novell convertible preferred stock.

Shares of Novell (NOVL: up $2.31 to $8.36, Research, Estimates), which has few followers on Wall Street compared with its glory days a decade ago, were up $2 to $8.05 in early trade on the Nasdaq stock market.

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The SuSE deal follows Novell's acquisition in August of Ximian, a tiny developer of desktop Linux software, which represents one of the few alternatives to Microsoft Corp.'s (MSFT: down $0.35 to $26.33, Research, Estimates) Windows software.

SuSE is Europe's leading distributor of Linux, a family of software that gives developers open access to its underlying code. The company ranks second among independent distributors of Linux behind Red Hat Inc. (RHAT: down $1.15 to $14.23, Research, Estimates) of the United States.

"This is a very important acquisition for Novell," said Phllip Rueppel, an analyst for America's Growth Capital in Boston. "It really bolsters its offensive capabilities vis-a-vis Red Hat and Microsoft."

Rueppel also said the IBM investment "illustrates a vote of confidence" in Novell, especially because the world's No. 1 computer maker already has a good relationship with SuSE, whose management includes some former IBM Europe executives.

In a statement, Novell said the SuSE deal is subject to regulatory approval and the winding up of shareholder agreements. Novell expects the deal to close late in its first fiscal quarter, ending in January 2004.

Novell said Citigroup Capital Markets provided financial advice for the purchase, while SuSE said Arma Partners was its investment adviser. SuSE had announced recently that it was seeking to be acquired.