Can Novell be Bought for $2 Billion?

Posted 03/04/2010 at 6:36am | by Paul Lilly

4

Comments

Print

Elliot Associates, a New York-based hedge fund who also happens to be one of Novell's largest shareholders, wants to acquire the enterprise software maker and hopes its offer of $2 billion will be enough.

Novell now has a tough decision to make. On one hand, cash hasn't really been a problem for the software vendor, who reported $991 million in cash and equivalents at the end of January. But at the same time, Novell's revenues continue to trend backwards, down 6 percent in the most recent quarter compared to one year ago.

"Over the past several years, [Novell] has attempted to diversify away from its legacy division with a series of acquisitions and changes in strategic focus that have largely been unsuccessful. As a result, we believe the company's stock has meaningfully underperformed all relevant indices and peers," Elliot said in a statement. "With over 33 years of experience in investing in public and private companies and an extensive track record of successfully structuring and executing acquisitions in the technology space, we believe that Elliot is uniquely situated to deliver maximum value to the company's stockholders on an expedited basis."

The offer on the table is $5.75 per share in cash, which was more than $1 over the software maker's closing price earlier this week. When news of the offer spread, however, Novell's stock shot up by as much as 29 percent to over $6 per share.