Hi George...About Takeover Rumors
>>Anyone have any thoughts on the NOVL takeover rumors?<<
Yes, I have some. Similar rumors surfaced last year at about the same
time. By comparing last year events with this year events, my best
guess is there is more than 50% chance that Novell is presently in
negotiations for sale of the company. Here is the whole story:
NOVEMBER 1995
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IBM (IBM.N) declines comment on takeover rumors
LAS VEGAS, Nov 13 (Reuter) - International Business Machines Corp
Chairman and Chief Executive Officer Lou Gerstner declined to comment
on rumors IBM is mulling a bid for software firm Novell Inc (NOVL.O).
"I have no comment on rumors," Gerstner told reporters at the
company's booth at the Comdex Computer trade show here.
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Novell(NOVL.O)shares up on IBM (IBM.N) speculation
NEW YORK, Nov 13 (Reuter) - Shares of Novell Inc climbed in active
trading on a report in PC Week that International Business Machines
Corp is close to making a bid for the networking software company,
traders said.
PC Week, a trade publication, cited sources as saying a senior vice
president at IBM told associates that the company's board of directors
has given its unofficial approval to proceed with a deal.
Last week, Novell chief executive officer Bob Frankenberg said in
response to a question about whether IBM would buy Novell that Novell
does not comment on rumors.
"Those are rumors," Frankenberg added while speaking at a Forrester
Research conference in Boston.
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Novell (NOVL.O) exec denies firm is for sale
LAS VEGAS, Nov 15 (Reuter) - A senior executive at Novell Inc on
Wednesday described as "patently false" news media speculation that
the company is for sale.
"It's utter speculation and there is no basis to that speculation,"
Christine Hughes, Novell's senior vice president for corporate
marketing, said in an interview at the Comdex computer industry trade
show.
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Stock Action / November 95
Date Vol. Price
11-06 2.1 16 9/16
11-07 3.3 16 1/2
11-08 6.0 17 1/2
11-09 5.9 17 5/8
11-10 2.8 17 3/8
11-13 8.1 18 9/16
11-14 7.8 18 1/2
11-15 5.4 17 1/2
11-16 3.4 17 5/8
11-17 4.4 17 1/4
11-20 3.7 16
11-21 5.1 16
11-22 2.0 15 7/8
Volume did not reach 3M again before the week of 12/11/95 when Q4-95
results were announced on 12/15/95.
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In fact, the whole story about 11/95 rumor is published in CRN this
week, to get this article, go to:
techweb.com
and search for Novell
2. Part One -- November 1995 - February 1996
COMPUTER RESELLER NEWS November 18, 1996
From the article:
NOVEMBER 1995
Novell, Orem, Utah, was making headlines of its own, when just weeks
after disclosing it would sell its applications business, the entire
company was put up for sale, sources said.
At that time, sources close to Novell told CRN it had been shopped to
IBM and AT&T Corp., New York. Both had displayed interest, but only if
Novell first completed the sale of its ailing applications business.
Hewlett-Packard Co., Palo Alto, Calif., and Compaq also were being
touted as possible partners, but those deals would be "more completed," sources said.
An outright sale of Novell would have been unthinkable just two years
ago but had been much rumored at that time. That management was
seeking a sale indicated the company felt it needed a large, cash-rich
partner to compete with Microsoft.
However, the week following this news, Novell moved quickly to quash
these reports, so much so that when approached at the Comdex/Fall
show, Novell Chairman Robert Frankenberg flatly denied them.
In addition to the statements of denial by Frankenberg and other
company executives, Novell also circulated a memo to employees stating
that the company was not for sale and has not been in discussions for
sale.
Meanwhile, others in the industry continued to speculate that Novell
was ripe for acquisition. "Are they an acquisition target?
Absolutely," said Terence Quinn, managing director at Furman Selz &
Co., New York.
Questioned about whether it is working on plans to buy Novell, IBM
Senior Executive Vice President John M. Thompson refused to comment on
specifics, but he said "IBM is still in [an] acquisition mode."
Asked if Novell fits the profile of the type of company that would
fulfill IBM's Gerstner's network-centric view of computing, Thompson
said, "The answer to your question is yes."
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Reviewing 11/95 events above, IMO what happened then is as follows:
1. Around 11/08/95, Novell started negotiations for sale of the
company to a potential buyer (most likely IBM).
2. Between 11/08/95 and 11/14/95 Novell didn't deny the rumor which
confirms there was something going on. Further, the stock action
confirms this view.
3. Around 11/14/95, the negotiations collapsed and Novell denied the
rumor on 11/15/95.
4. After the rumor was denied, the shares acquired during the previous
5-6 trading days were sold during the next 5-6 trading days.
NOVEMBER 1996
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Saturday, November 9, 1996
STOCK HIKE SUGGESTS NOVELL TAKEOVER
BY LISA CARRICABURU
THE SALT LAKE TRIBUNE
From the article:
Novell spokesman Peter Troop on Friday declined to discuss whether
Novell is involved in negotiations with interested buyers.
``We just don't comment on short-term market activity,'' he added.
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On 11/14/96, Novell indicated that Q4-96 financial results will be
announced on 11/26/96 instead of 12/13/96.
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Stock Action / November 1996
Date Vol. Price
11-06 1.4 9 5/16
11-07 2.3 9 1/8
11-08 13.3 11 1/2
11-11 9.2 10 5/8
11-12 5.2 10 1/2
11-13 3.1 10 1/4
11-14 5.2 11 3/8
11-15 6.5 10 11/16
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Reviewing 11/96 events above, IMO what is happening now is as follows:
1. There is more than 50% chance that Novell is in negotiation now for
sale of the company. Note that Novell has not denied the rumor, in
contrast to last year when they flatly denied the rumor after about
one week of heavy stock activities.
2. Novell early announcement of Q4-96 financial results indicates that
they want to hint that the results are good and accordingly hike the
stock price to the 13-15 range. This stock price range justifies an
offer in the low twenties for a potential buyer and would be acceptable to the board.
If what I am saying is true, then what is the possibility of an
offer?. I would say, it is very good for the following reasons:
1. The outstanding shares are about 10% less than last year (352M vs
376M).
2. The company is in better strategic position than last year. They
are deeply involved in the Internet/Intranet revolution and taking
aggressive steps to make NDS the de-facto standard directory.
3. Marengi indicated in several interviews that the board would be
willing to talk to potential buyers.
4. In order to assure future success of the company, they need a
cash-rich partner to compete with Microsoft.
5. The company does not seem to be in a rush to find a new CEO.
In summary, as long as Novell does not deny the rumor, the possibility
of an offer is still alive. Also, I am not suggesting that you
mortgage your house and buy Novell stock. IMO, if this company is
about to turnaround, we will make more money in the long run. However,
like Eric Hall said, you need the patience of Job.
Hopefully, I didn't bore you.
Regards
Salah |
