Novell sells itself in two-part, $2.2 billion deal
Novell, Inc. President and Chief Executive Officer Ronald Hovsepian speaks during the Reuters Global Technology, Media and Telecoms Summit in New York, May 15, 2007.
Credit: Reuters/Keith Bedford
BOSTON |
BOSTON (Reuters) - Novell Inc will sell itself in a complex $2.2 billion deal that includes the sale of key patents to a consortium led by Microsoft Corp and ends a months-long auction that frustrated investors.
Most of Novell, a pioneer in computer technologies, will go to Attachmate Corp, a data center software maker owned by an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo.
Attachment will pay $6.10 a share, a slim premium to last week's close -- but 28 percent more than Novell's price in early March just before it disclosed an unsolicited offer from another investment group.
Attachmate's actual cost will, however, be about $650 million after accounting for Novell's approximately $1 billion of cash and the $450 million from the patents sale.
Shares of Novell -- which was on the selling block for months before it secured final agreements -- rose 6.6 percent to $5.96 in the afternoon, still a shade below the offer price.
The agreement follows Novell's rejection in March of an unsolicited proposal from private equity firm Elliott Management. That bid kicked off an auction for the troubled maker of software that big corporations use to operate their data centers.
The deal -- which is conditional on Microsoft's purchase of patents -- also calls for Elliott Management to take an undisclosed equity stake in Attachmate.
Novell's crown jewels include a popular version of the Linux operating system and software that companies use to monitor employee identities. It also sells a corporate email program and Unix operating system, but sales of those are on the decline.
"It's a combination of some declining businesses and some growth businesses. I think it's fairly priced," said Jefferies & Co analyst Katherine Egbert.
THE RETURN OF ELLIOTT
Novell engineered the deal after spending months reviewing offers in its various assets from potential buyers, including questioning whether it should remain independent.
"The board explored all alternatives ... and found this to be the best value for our shareholders," Novell Chief Executive Ron Hovsepian said in an interview.
Both deals are expected to close in the first quarter of next year.
Novell and Microsoft did not disclose which patents will change hands. Microsoft declined to identify the other companies in the coalition.
Novell, which was founded in 1979, has been a pioneer in key computer technologies over the past three decades including networking, Unix operating systems, email software and, more recently, the Linux operating system.
Sorry Mogden:”The threat is that commercial users or distributors who can pay royalties will be asked to pay royalties, and the nonprofit community-based sector that actually produces the innovation and which cannot pay royalties or accept conditions on distribution will be hobbled, interfered with or impeded,” – goes the other way around: Anyone that seeks to use open source software, are not allowed to charge for this. That is the license agreement. Should others need to charge, the revenue generated would hit the Open Source Foundation first and distributed among that community. This community would also have full rights to make competing “free” products.
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