Novell’s gone awfully quiet since last week when Elliott Associates, a New York hedge fund better known for trafficking in Peruvian debt, offered $5.75 a share to take in private.
In fact, the only peep out of it has been the constant rustle of its stock trading hands apparently in anticipation of either a sweetened offer or a white knight riding in to save it from the clutches of a known “vulture capitalist.”
From March 3 through March 11, something like 240 million shares of Novell were bought and sold. It’s only got about 300 million shares outstanding – and Elliott already owns 8.5% of the company – so that theoretically means that only around 11.5% of its shares didn’t trade.
The spike in Novell’s price has simmered down since ballooning to $6.15 last Wednesday, the day after the offer was made. It had slipped to within a nickel of Elliott’s price when the market closed Thursday, possibly because no other offer has appeared on the horizon.
No surprise there.
Bloomberg found someone “familiar with the matter” to tell it Thursday that Elliott would sell off Novell’s legacy NetWare business if it gets its hands on the company, maybe try to find a buyer for its Linux unit, repatriate the $400 million in cash Novell has offshore (despite Elliott’s stated concerns about taxes, it would seem), try to run the joint more efficiently and improve the current $239,496 ratio of sales to employee.
Bloomberg’s source said the company is overspending on employees. Guess we know what that could mean.
The source also told Bloomberg that Novell’s board is supposed to meet early next week to consider Elliott’s offer.
Bloomberg got a lot farther than we did. Novell’s spokesman didn’t return our calls and Elliott’s spokesman wouldn’t be pinned down on whether or not the two companies have been talking, a simple question to which we basically got “yes,” then “no,” then “I can’t talk about it yet.”
But darned if he didn’t keep his word and call back later to say that no Elliott hasn’t heard back from Novell since a week ago Tuesday when it acknowledged its offer; no, Elliott wasn’t acting for somebody else (although that like any discussions of the SCO suit against Novell may be over his pay grade); and that Bloomberg was wrong, wrong, wrong.
He forwarded a statement saying that the Bloomberg story was “inaccurate and erroneous” and that “Elliott wants to own the company. Elliott has no plans to sell any business units.” He said he tried to reason with Bloomberg before its story went out but the wire service wasn’t having any of it.
Like Bloomberg, Ovum, the London researcher, figures that whether or not Elliott succeeds in buying Novell, Novell is still burnt toast and “likely to end up in pieces.”
It thinks there will be a better offer but not much; that Novell’s board is likely to reject the Elliott’s bid ahead of BrainShare, which starts on March 21; and that Elliott might go directly to Novell’s shareholders.
It also figures that the only way any of the great industry lights speculated on as potential Novell saviors – everybody from Cisco, CA, Dell, Google, HP, IBM, Oracle, SAP, VMware through to Microsoft – are going to get within a 10-foot barge poll of Novell is at a rummage sale.
Heck, it even imagines that “As part of its strategy to rebuff EA’s efforts, Novell’s board may well offer to dismantle the company itself so that all profits end up in its shareholders’ pockets rather than EA’s.”
It thinks the Linux business will be the first to go with IBM the most likely buyer – presumably after Elliott deals with SCO, we might interject – since IBM lent Novell the money to buy SUSE in the first place to make sure Red Hat didn’t turn into Microsoft II and since SUSE is the preferred Linux on its mainframes.
Ovum also likes CA for Novell identity and access management portfolio, maybe even its system management stuff too though it needs more integration.
It figures Elliott could probably make a buck on Novell’s patents. Whether the same could be said for Novell’s WordPerfect suit against Microsoft remains to be seen.