Novell Stockholders Accept Merger With Attachmate

By Chris Preimesberger  |  Posted 2011-02-17

Stockholders of networking and middleware provider Novell voted at a special meeting Feb. 17 to accept the merger agreement made Nov. 21, 2010, with Attachmate Corp. and Longview Software Acquisition Corp.

Attachmate Corp. will spend $2.2 billion in cash, or $6.10 per share, for Waltham, Mass.-based Novell, which has been beset by financial problems for several years.

Thirty-year-old Attachmate, which has about 65,000 customers, is an IT host connectivity and systems/security management integrator that has offices on six continents and is headquartered in Seattle. It is owned by an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo.

At the time of the acquisition announcement, Novell also said it will sell some of its intellectual property assets to CPTN Holdings LLC, a consortium of technology companies organized by Microsoft, for $450 million in cash.  This payment will be contained in the amount to be paid by Attachmate, Novell said.

Novell did not specify which assets Microsoft will get, but senior IT analyst Katherine Egbert of Jefferies & Co. said in November that they are "most likely related to WordPerfect, which Novell acquired in the late 1990s, and through which Novell had sued Microsoft for anti-competitive behavior.

"Recall that Microsoft had settled outstanding litigation with Novell related to Unix in 2006, paying what amounted to [about] $350 million to Novell over several years," Egbert said.

The WordPerfect product line was sold twice, first to Novell in June 1994, which then sold it to Corel in January 1996. However, Novell kept the WordPerfect Office technology, incorporating it into its GroupWise messaging and collaboration product.

The longtime rumor that Novell was planning to sell its Linux server business to VMware in a separate deal turned out not to be true. Attachmate, however, said it plans to break out Novell's enterprise Linux business, SUSE, into a separate business unit and join both Novell and SUSE with its other holdings, which include NetIQ.

"The $6.10 per share acquisition price appears to be a reasonable takeout value," Egbert said. "It values NOVL shares at 2.7x EV/revenue and 25x forward earnings. The sale of SUSE Linux by Novell to Attachmate is also a mild positive for Red Hat."


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