Mandrakesoft will buy fellow Linux vendor Conectiva for 1.79 million euros (£1.24 million) in stock.
With just over three percent of the worldwide Linux market, MandrakeSoft is the number four Linux vendor, after Red Hat, Novell and Turbolinux, according to IDC.
IDC ranked Conectiva number six worldwide in 2003. The Brazilian company employs 60 people with 1.7 million euros in revenue.
The acquisition will strengthen Mandrakesoft's international position and offer the company "greater opportunity for continued expansion," said Francois Bancilhon, Mandrakesoft's CEO.
Mandrakesoft had revenues of 5.18 million euros - quite a turnaround for a company that three years ago was appealing directly to users for help paying the bills. Mandrakesoft entered into bankruptcy in 2003, and emerged in March 2004.