The recent $2 billion offer by Investment fund Elliot Associates, a major share holder, to buy software maker Novell Inc. has sent Novell’s shares up 28% as investors hoped for a better offer, JSM Financial was informed.
Once the bid was made public knowledge, analysts said several prominent software makers would consider bidding too as they could sell their programs alongside Novell’s version of Linux, an operating system widely used by both financial institutions and telecoms carriers among others. Novell is the world’s second largest maker of the open source Linux operating system.
JSM Financial has learned from a recent press release that Elliot Associates, which already controls 8.5% of Novell stock, offered to pay $5.75 per share, or a premium of 21% over the March 2nd closing price.
A research analyst said that compared to other recent deals that were transacted in the enterprise software space the deal price here was on the low side and that he expected to see either a higher bid later on or other external bids coming in.
JSM Financial believes companies such as Dell, Hewlett Packard, SAP and IBM may well still compete for the firm with rival bids.
In its press release Elliot Associates said, “Novell is a long-established company that we have followed closely for a considerable period of time. Over the past several years, the Company has attempted to diversify away from its legacy division with a series of acquisitions and changes in strategic focus that have largely been unsuccessful. As a result, we believe the Company's stock has meaningfully underperformed all relevant indices and peers. With over 33 years of experience in investing in public and private companies and an extensive track record of successfully structuring and executing acquisitions in the technology space, we believe that Elliott is uniquely situated to deliver maximum value to the Company's stockholders on an expedited basis.”
Novell's customers include Wal-Mart Stores Inc, Wyndham Worldwide Corp and Casio Computer, JSM Financial learned from the firm’s website.
