Infrastructure // PC & Servers
News
5/20/2010
01:22 PM
Connect Directly
RSS
E-Mail
50%
50%

Novell Acquisition Bids Going Public

Up to 20 firms, mostly hedge funds, are considering trying to take over the software company.

Hedge funds have intensified their efforts to take over Novell, a signal that the software company appears destined to be broken up.

After hedge fund Elliott Associates made a public bid for Novell in March, the company said it would solicit offers from other firms in a tactic that could drive up Novell stock. Elliott's bid resulted in Novell's stock price jumping 30% to more than $6 a share.

The stock was trading at $5.93 in stock market trading Wednesday. The Wall Street Journal reported that about 20 potential acquirers -- most of them hedge funds -- have been examining Novell and are likely to make their bids public this week.

In similar situations the acquiring firm generally breaks up the acquired firm and sells the pieces off one at a time on the theory that the sum of the parts is worth more than the standalone company. Founded in 1979 in Utah as Novell Data Systems, the company has been built up over the years by acquisitions. Today Novell has four major units.

One Novell operation, established in 2006 with Microsoft, markets open source software. Novell's 2003 acquisition of SUSE in 2003 strengthened its open source business. Its main open source software products include SUSE Linux Enterprise Server, SUSE Linux Enterprise Desktop, and SUSE Moblin.

When Elliott made its unsolicited bid in early March, the hedge fund said it owned some 8.5% of Novell. Elliott criticized Novell for what it called largely unsuccessful "acquisitions and changes in strategic focus."

In its most recent financial report, Novell said it had a first-quarter profit of $20.2 million on revenue of $202.4 million.

Comment  | 
Print  | 
More Insights
Server Market Splitsville
Server Market Splitsville
Just because the server market's in the doldrums doesn't mean innovation has ceased. Far from it -- server technology is enjoying the biggest renaissance since the dawn of x86 systems. But the primary driver is now service providers, not enterprises.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest September 24, 2014
Start improving branch office support by tapping public and private cloud resources to boost performance, increase worker productivity, and cut costs.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.