Microsoft Gets Novell IP In $2.2 Billion Carve-Up

Open source company Novell, has been sold – and a Microsoft-backed consortium is getting intellectual property worth $450 million (£280m), while the bulk of the company goes to system management firm Attachmate.

Attachmate, a system management firm run by venture-capital financiers, will get most of Novell, for $2.2 billion (£1.4bn), but concerns are being raised about the intellectual property which is falling into Microsoft’s control. With the SUSE distribution, Novell is the second biggest Linux company, and also owns Unix, which shares a heritage with Linux.

What will happen to SUSE?

“Attachmate Corporation plans to operate Novell as two business units: Novell and SUSE; and will join them with its other holdings, Attachmate and NetIQ,” said the Novell release on the deal.

Attachmate has a historical business dating from the 1980s in terminal emulation, along with the NetIQ system management product. However, Attachmate is widely regarded as a mere holding company, and the deal has been described as a private equity takeover with Attachmate’s owners, an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo.

In March this year, hedge fund Elliot Associates attempted to buy Novell, but this came to nothing.

IP threat to Linux?

The intellectual property which has fallen into the control of Microsoft is causing concern. CPTN Holdings, described as “a consortium of technology companies organised by Microsoft” has acquired intellectual property worth $450 million, but Novell has refused to describe what intellectual property is covered by the deal.

Microsoft claimed some years ago that Linux infringed on its intellectual property, but in 2006 Novell was the only major Linux distributor to sign an agreement with Microsoft, freeing it from potential legal action, and creating a joint interoperability lab and joint support network for Microsoft and open source products.

“Fears about a Microsoft-led legal charge against Linux have declined somewhat but it should be apparent to anyone involved in this deal that the general business community — customers, vendors, developers and partners — need more details than what has been dropped on their plate this Thanksgiving week,” said Dana Blankenhorn at ZDNet.

“After a thorough review of a broad range of alternatives to enhance stockholder value, our Board of Directors concluded that the best available alternative was the combination of a merger with Attachmate Corporation and a sale of certain intellectual property assets to the consortium,” said Ron Hovsepian, president and CEO of Novell.

“We also believe the transaction with Attachmate Corporation will deliver important benefits to Novell’s customers, partners and employees by providing opportunities for building on Novell’s brands, innovation and market leadership,” said Hovsepian.

Despite being largely obscure, Attachmate hit the headlines in 2009, when CEO Jeff Hawn was sentenced to ten days in jail for authorising the killing of 32 of his neighbour’s bison.

Update: Our original headline has been corrected, because the amount paid by the Microsoft-backed CPTN consortium is included in the total $2.2 billion,