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Thursday, 04 March 2010 17:59

Hedge fund offers to buy Novell for $US2b

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Close on the heels of its first quarter results comes the news that a hedge fund is now trying to buy Novell for $US2 billion.
The offer was published along with a press release from the hedge fund, Elliott Associates, dated March 2, on the StreetInsider.com website.

Elliott Associates, along with a related firm, Elliott International, is the third largest owner of Novell stock, with about eight percent.

The letter made an offer of $US5.75 per share on an all-cash basis. It said the offer represented a 37 premium on Novell's share price on January 4 and a 20 percent premium on the price of March 1.

In its recent results announcement, Novell indicated that it had a balance of $US991 million in cash, cash equivalents and short-term investments.

The hedge fund release said its offer represented a premium of 49 percent on the current enterprise value.

UPDATED March 5, 2am: In a short note, Novell confirmed the offer from Elliott Associates to buy the company for $US5.75 per share. "Novell anticipates that its Board of Directors will review Elliott's proposal in consultation with its financial and legal advisors. J.P. Morgan is serving as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Novell," the company added.

Novell has had a hard time making profits ever since its NetWare product was knocked off the pedestal it occupied in the '80s and early 1990s. In November 2006, the company signed a patent-licensing deal with Microsoft but has yet to show substantial gains from the deal.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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