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Monday, 22 March 2010 03:44

Novell rejects hedge fund offer

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Novell has rejected an offer made by hedge fund Elliott Associates on March 2 to buy the company for $US5.75 a share.


The company said on Saturday that its board had considered the proposal in the light of a review by its independent financial and legal advisers and concluded that it was inadequate and undervalued Novell's franchise and growth prospects.

Elliott Associates and a related firm, Elliott International, are the third largest owners of Novell stock, holding about eight percent.

Elliott's offer, of a total of $US2 billion in cash, represented a 37 percent premium on the share price of January 4 and a 20 percent premium on the price of March 1. It was made shortly after Novell announced its results for the first quarter, indicating that its Linux business was at a break-even point.

Novell also announced that its board had authorised "a thorough review of various alternatives to enhance stockholder value."

It said, "these alternatives include, but are not limited to, a return of capital to stockholders through a stock repurchase or cash dividend, strategic partnerships and alliances, joint ventures, a recapitalisation and a sale of the company."

Novell signed a patent-licensing deal with Microsoft in 2006, in a bid to turn around its fortunes and return to the days when it was doing well. But the partnership has so far failed to bring the company out of trouble.

 


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Sam Varghese

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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