Novell Rejects Elliott Associates Buyout

Mar 22, 2010

Novell CEO Ron Hovsepian informed all Novell customers per email on March 20 that the buyout proposal from Elliott Associates was rejected in that it undervalued the company.

The press release and email to customers informed them that Novell had carefully considered the proposal from Elliott Associates, L.P. and came to the conclusion that it greatly undervalued the growth and franchising potential of the company. For this reason the company is looking for "alternatives" to the deal. As Hovsepian indicates in his email to customers:

"Today we issued a press release announcing that our Board of Directors has concluded, after careful consideration, including a review of the proposal with its independent financial and legal advisors, that Elliott's proposal is inadequate and that it undervalues the Company's franchise and growth prospects."

The "alternatives" the company is considering are to enhance stockholder value. These include return of capital through stock repurchase, strategic partnerships and joint ventures, even a recapitalization and sale of the company, according to the press release.

The announcement ends with an optimism that that Novell is "committed to enhancing value" for its stockholders and that theses alternatives are in its and their best interest. However, "Novell's Board noted that there can be no assurance that this will result in any agreement or transaction" and until the Board approves a specific course of action, Novell "does not intend to disclose developments" about any of the mentioned alternatives.

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  • Information

    Hi, This information seems pretty much useful to me. I really like it.
  • Rejected Proposal

    The real deal here us that IT buyers have been leery of committing to buy important technologies from Novell for the last 2+ years. Likely a combination of concern about their ability to be viable over the long haul, as well as a fairly bland set of offerings.

    Now, with this hanging over their head, even less people will be willing to commit to multi-year strategic investments for any of their technologies. They have nothing unique to offer, and there are safer bets to buy either Linux, or directory, or systems mgmt software from. What IT manager or CIO in their right mind would commit to deploying a bunch of Novell stuff with this situation now – and then possibly be fired in 3-6 months when something happens to their supplier, Novell.

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