VMW may be interested in buying a piece of Novell:
VMware Eyed As Strategic Buyer of Novell's SUSE Linux
By Jennifer Cummings Of DOW JONES NEWSWIRES
SEPTEMBER 15, 2010, 11:54 A.M. ET
NEW YORK (Dow Jones)--VMware Inc. (VMW) and several other software companies were being pointed to Wednesday as the potential buyers of Novell Inc.'s (NOVL) open-source operating system SUSE Linux.
The speculation about a deal comes after a report by the New York Post Wednesday that software provider Novell has reached a deal in principle to sell itself in two parts, and will be signing a deal in three to four weeks.
The Post, which cited people close to the process, said a strategic buyer will purchase the piece of Novell that develops and delivers SUSE Linux, with a private-equity firm buying much of the rest of the company.
Several analysts said the most likely purchaser of SUSE Linux is virtualization and cloud infrastructure company VMware, noting that the company is already partnered with Novell in this area. They also said that purchasing the SUSE Linux could be a good strategic move for VMware.
"It furthers their strategic need to build out their software stack," Cross Research analyst Richard Williams said.
Novell declined to comment for this story and VMware couldn't be immediately reached for comment.
The speculation about the strategic buyer wasn't being limited to VMware.
"Novell has a fantastic collection of technology assets and intellectual property that could appeal to a wide number of buyers," Macquarie Securities analyst Brad Zelnick said.
Other potential buyers being named were Oracle Corp. (ORCL), EMC Corp. (EMC) and Red Hat Inc. (RHT).
News that Novell could be close to a deal helped push up the company's shares Wednesday, with the stock recently up 5.9% to $5.90.
In March, Novell essentially put itself up for sale after rejecting an unsolicited bid by hedge fund Elliot Associates LP to buy the company for about $1.8 billion, a price Novell said was too low. As of Tuesday's close, Novell's market capitalization was about $2.08 billion.
Regardless of who the buyer is, the sale of SUSE Linux to a strategic buyer is probably a better move for the company than doing the entire deal with a private equity firm, analysts said.
By selling SUSE Linux separately, Novell can "extract the most value for current shareholders," Pacific Crest analyst Nabil Elsheshai said.
-By Jennifer Cummings, Dow Jones Newswires; 212-416-2474; jennifer.cummings@dowjones.com
online.wsj.com |
