Novell Confirms $1B Acquisition Bid by Hedge Fund

By Chris Preimesberger  |  Posted 2010-03-02 Print this article Print

UPDATED: The software networking company reports that Elliott Associates of New York sent a letter to its board of directors offering to buy the company for $5.75 per share, a 115 percent premium over the stock value on Jan. 4, 2009. Stock prices rose 26 percent to $6 in after-hours trading on March 2.

Networking software maker Novell confirmed late March 2 that it has received an unsolicited offer of $1 billion, net of cash on the company's books, to be acquired by Elliott Associates, a New York-based hedge fund that already owns 8.5 percent of the company.

The statement issued by Novell's corporate marketing manager, Ian Bruce, read:

Novell, Inc. (Nasdaq: NOVL) today confirmed that it has received an unsolicited, conditional proposal from Elliott Associates, L.P. to acquire the Company for $5.75 per share in cash. Novell anticipates that its Board of Directors will review Elliott's proposal in consultation with its financial and legal advisors. J.P. Morgan is serving as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Novell.
According to its quarterly reports, Novell had about $650 million in cash on hand as of Oct. 31, 2009, and another $600 million in short-term investments and net receivables. Not counting those assets, the purchase price would be about $2 billion.

The news spread quickly among investors, and after-hours trading pushed Novell's stock price up 26 percent to $6 per share. It had ended the trading day at $4.75.

Elliott Associates sent the letter dated March 2 to Novell's board of directors offering to buy the company for $5.75 per share-a 115 percent premium over its Jan. 4 stock value-"the last trading day before we commenced actively acquiring Novell's common stock."

Elliott Associates principal and founder Richard Wilson did not respond immediately to an eWEEK query.

The investment fund apparently has not been a happy investor in recent years.

"Over the past several years, the company has attempted to diversify away from its legacy division with a series of acquisitions and changes in strategic focus that have largely been unsuccessful," Elliott Associates said in the letter. "As a result, we believe the company's stock has meaningfully underperformed all relevant indices and peers."

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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