Novell Rejects Elliot Takeover Bid

Software vendor Novell has rejected a takeover bid by finance company Elliot Associates, and will assess its other options, according to a statement.

Once-mighty Novell confirmed on 3 March that Elliot had made an unsolicited $2 billion offer for the company, which once rivalled Microsoft and in the 1980s and 1990s owned the market for office network file-and-print servers, and has recently emerged as an open source player, based on the SUSE Linux distribution and buoyed by a controversial support deal with Microsoft.

Board seeks alternatives to “inadequate” offer

Novell’s board, in a statement, has rejected the Elliot offer as “inadequate”, and promised shareholders to review other options which would convince them that company is worth more than the sum on the table. Elliot, which owns 8.5 percent of Novell, offered $5.75 per share, or around 21 percent more than the value at which stock was then trading.

As a hedge fund, Elliot is not believed to have any great interest in Novell’s technology. The bid is expected to be a prelude to breaking the company up, and the options Novell will look at will include finding a “white knight” purchaser with an interest in keeping Novell’s brand and technology alive.

Among those who stand to lose if Novell disappears is Microsoft. Despite a history of hostility towards the open source world, Microsoft has managed to establish a presence in open source. Those involved at Novell argue that Microsoft’s support shows the company now accepts an enterprise role for Linux, and similar claims are made for other initiatives such as the Codeplex Foundation.