The company's directors are hoping another firm will make a purchase offer above Elliot Associates' $2 billion bid to acquire Novell.
In play as an acquisition candidate, Novell is waiting with bated breath for new bids that would raise its stock price above the $5.75 a share that Elliott Associates has offered for the software firm.
In the latest development, Elliott Associates, which owns some 8.5% of Novell stock, said it welcomed Novell's decision to sell the company. Elliott started the process early this month when it made its offer to acquire the firm, which caused Novell stock to soar from $4.75 to more than $6 a share.
"We welcome the (Novell) board's decision to conduct a sale of the company, which we believe is the best way to maximize shareholder value," Elliott said in a statement this week. "Our goal is to acquire Novell, and our cash offer to acquire all of the company's shares for $5.75 per share provides shareholders with a substantial premium."
Novell's directors had rejected the $2 billion Elliott offer, calling it "inadequate" and saying that it "undervalues the company's franchise and growth prospects."
When it made its initial offer, Elliott said the software firm had attempted to diversify away from its legacy "with a series of acquisitions and changes in strategic focus that have largely been unsuccessful." Elliott added that it believed its substantial background and knowledge of the software business would enable it to deliver a better value to the firm's stockholders.
To date, however, no alternative bidder has appeared.
Novell has had a long and storied -- and sometimes controversial -- history. The firm traces its beginnings to 1979 in Utah as Novell Data Systems, but after a string of acquisitions, it moved to suburban Boston. A key acquisition was its pickup of Cambridge Technology Partners in 2001 and later of SUSE in 2003, which made it a player in the open source software market.