Novell Offered Takeover Proposal

Mar 03, 2010

Novell is back on the winning side. But investment firm Elliott Associates considers its stock below where it should be. Therefore, Elliott wants to take over the Linux and NetWare firm altogether.

Novell and Elliott both confirmed the takeover proposal in a press release. According to Novell, Elliott wants to pay $5.75 per share in cash. The NASDAQ promptly reacted and Novell's share price soared by as much as 37 percent in late trading March 2, rising above Elliott's per-share offer. The NY Times reported a $2 billion offer, although this bid may go even higher.

Elliott Associates now owns 8.5 percent of Novell's outstanding shares, putting it among the highest shareholders. With the takeover it wants to strengthen Novell's weak share position, having lost 85 percent of its value in the past 10 years. Elliott considers the past years of results as unsuccessful, but didn't mention Linux or open source in particular.

Novell is considering the proposal closely. Its immediate interest might be improving sales and cutting costs more so than selling the company.

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