Novell gets an offer:
Elliott Associates Offers to Buy Novell
March 2, 2010, 5:14 pm
DealBook
New York Times
The hedge fund Elliott Associates said Tuesday afternoon that it had made an offer to buy Novell in a deal that valued the business software company at about $2 billion.
Elliott said it would pay $5.75 a share in cash for Novell, a price that is 21 percent higher than Novell’s closing stock price on Tuesday. Wall Street’s initial response to the bid, announced after the stock market closed, was to anticipate the possibility of a higher offer. Novell’s shares jumped $1.32, or nearly 28 percent, to $6.07 in after-hours trading.
Elliott, an investment firm that specializes in distressed companies, said it currently held 8.5 percent of Novell’s stock, so it would be putting up about $1.83 billion in cash to buy the remainder. The firm has $16 billion in assets under management.
In a letter to Novell’s board, Jesse A. Cohn, portfolio manager of Elliott, explained the rationale for the firm’s bid for Novell:
“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 did not immediately respond to calls and e-mails for comment.
Last week, Novell reported that its fiscal first-quarter net income rose 89 percent, to $20.2 million, or 6 cents a share. Its revenue, however, slipped 6 percent, to $202.4 million.
– Jack Lynch
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