Hedge Fund Offers $2 Billion For Novell 144
CWmike writes "A hedge fund that is already one of Novell's largest shareholders offered on Tuesday to acquire the struggling, cash-rich enterprise software maker for $2 billion. The unsolicited offer, from New York-based Elliot Associates L.P., is for $5.75 per share in cash, a dollar per share more than Novell's closing price Tuesday of $4.75. The offer caused Novell's stock to leap 29% to $6.15 in after-hours trading. Because Novell is so cash-rich — it had $991 million in cash and equivalents at the end of January (PDF) — Elliott says the deal values Novell as an enterprise alone at about $1 billion."
Re:It's been a while, but... (Score:3, Insightful)
OMFG I'm stupid. Got confused with Symantec :-/
Already Under Investigation (Score:5, Insightful)
Re:Sold! (Score:4, Insightful)
Fiduciary duty (Score:5, Insightful)
I'll speculate that the phrase "potential breaches of fiduciary duty" is lawyer-ese for "your bid is too low".
No speculation needed. That is exactly what it most often means. The board of any company has a duty to maximize the return to any shareholders. Selling the company might be the best way to accomplish that - or it might not. Everything in finance is essentially a guess as to what will make the most money. It needs to be a well researched and reasoned guess but it is still a guess at the end of the day. If shareholders think they are getting a bad price it is entirely reasonable and proper for them to lawyer up and say so.
I actually researched Novell as a possible investment about 5 years ago and came to the conclusion that the company was in a slow death spiral. Not an inescapable one but I don't see them doing anything that gives me confidence they could escape it and their stock price hasn't budged since then. The price being offered is approximately the current market capitalization. (the market cap rose yesterday once the offer price was announced - arbitrageurs bought in to bring the price close to the offer price) Novell has a lot of cash and they have some decent products that have high switching costs which is keeping them in the game. But they aren't capturing much new business. Basically I think they'll end up getting sold in whole or in parts to Oracle, IBM or HP after the hedge fund is done stripping out all the cash from the company. Novell likely has undervalued assets that are worth more separately than together.
Disclosure: I am an accountant and I've worked on due diligence for the sales of companies.
Worth more in pieces than together (Score:5, Insightful)
From a pure financial play I don't see how paying 2 billion for 990+ million cash makes sense.
Basically because the hedge fund is probably betting they can sell the assets of Novell for more than $1.1B. Groupwise alone in the right hands (HP or Oracle maybe?) is basically an annuity that might be worth that much. Novell has other products that are decent and probably worth something to the right party. My guess is that the hedge fund will strip out the cash and then sell the assets of the company to the highest bidder on the theory that the assets are worth more than the whole company.
The rest of Novel isn't really worth anything UNLESS, they turn Novel into another FLOSS services firm like RedHat.
Doubtful. Novell's value is in its installed base of software - not in their services. I don't think it could turn itself into a successful service company - better to sell to a large service company (HP, Oracle, IBM). I don't think they have the resources to transform themselves like that and if they tried I'd expect the shareholders to be pissed. Selling the company is probably the right play - the only question is what price can they get?
Re:Interesting how fortunes turn (Score:3, Insightful)
Some things are easier in Windows than *nix, and some things are easier in *nix than Windows. Probably the single best thing Windows has going for it is Active Directory, and in particular the group policies. I haven't seen anything in the *nix world that is as easy to manage large numbers of workstations and servers.
At the same time, being a long-time command line guy, I find *nix to be easier to navigate. I often find the GUI simply gets in my way. Microsoft seems to have figured it out to some degree with Server 2008, but I find PowerShell pretty awkward, and prefer the sh variants. Maybe it's familiarity, but what I could do in a few minutes with a shell script usually takes me three times as long with any of Microsoft's CLI tools. When it comes to the CLI, the old axiom "Those who don't understand Unix are doomed to reimpliment it badly." Microsoft's CLI toolset has always been a poorly thought-out hodge podge.
Re:It's been a while, but... (Score:3, Insightful)
but we're almost being forced to move things Windows-way out of necessity/attrition.
What is the necessity that is driving you onto Windows? I'm curious because I started my professional IT career working on Netware (3.12 and 4.11). I spent the better part of the last decade working with Windows. My boss who ran the consulting firm I was working for had originally been a Netware guy and saw the writing on the wall with regards to Windows and the Microsoft behemoth. It is interesting to me that in this day and age, people are still looking at a switch to Microsoft as a necessity in face of open source solutions.