Novell takeover: Finally goes to Attachmate for $2.2 Billion
By Kukil Bora, SiliconIndia   |   Thursday, 25 November 2010, 14:13 IST
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Novell takeover: Finally goes to Attachmate for $2.2 Billion
Bangalore: It was in March this year when equity firm Elliott Associates LP proposed to buy Waltham-based business software firm Novell for $2 billion, but it rejected the proposal saying that the offer price was too low. Now after eight months of negotiations with a variety of potential buyers, Novell has finally entered into a definitive merger agreement with Seattle-based Attachmate Corporation. Under this agreement, Attachmate would acquire Novell for $6.10 per share in cash in a transaction valued at $2.2 billion. Novell has also announced that some of its intellectual property assets will also be acquired by CPTN Holdings LLC, a consortium of technology companies organized by Microsoft, for $450 million in cash. The Microsoft-led initiative has greased the wheels of the deal that had been held up for months over the complexity of unscrambling Novell's broad collection of rights and agreeing a valuation for its declining core business. It's only after the injection of $450 million, when Novell would be sold to Attachmate, which is owned by the private equity firms Francisco Partners, Golden Gate Capital and Thomas Bravo. The $6.10 per share consideration represents a premium of 28 percent to Novell's closing share price on March 2, 2010, which was the last trading day prior to the public disclosure of Elliott's proposal to acquire all of the outstanding shares of Novell for $5.75 per share and a 9 percent premium to Novell's closing stock price on November 19, 2010. As part of the deal, Elliott will become a shareholder in Attachmate. What is the reason behind Novell agreeing to be sold only at 10 percent higher than the original offer from Elliott? According to technology research firm IDC, the purchase price clearly demonstrates that the sale was not an easy one to pull off. The research firm also added that although some of Novell's older businesses are still generating cash, they are not hugely profitable. According to IDC analyst Matt Eastwood, it's not yet disclosed what Microsoft's consortium had purchased, but Novell's virtualization technology PlateSpin is likely to be the target. However, Attachment is also likely to be interested in the virtualization technology as well. In the 1990s, Novell made a failed attempt to take on Microsoft in the desktop software business. As another attempt to revive its business, it purchased the German Linux company Suse in 2004, the second-biggest player in the Linux business after Red Hat. Suse would be run as a separate business unit after the deal, said Attachmate. Novell already has 600 employees in India, with 500 in Bangalore. In the year 2007, both Novell and Microsoft made a deal, under which Novell agreed to cross-license its software. In the open source world, this was seen as an aggressive attempt by Microsoft to assert its own intellectual property rights over Linux. By contrast, Microsoft's intervention in the deal is considered by some quarters as a defensive move, an attempt to prevent the Novell intellectual property falling into the hands of an investor, who would use it to sue other technology companies. Attachmate, founded in the early 1980s, is a software company whose products include terminal emulation programs that allow clients like banks and government agencies to access programs left over from early computer systems. The company says it has more than 65,000 customers. Attachmate has 925 employees. Novell has 3,600 employees, including 300 in Massachusetts and 1,300 in Provo, Utah.

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