Elliott Associates, the hedge fund that’s seeking to acquire Novell and SUSE Linux, is denying a report that it plans to break up Novell and sell off the pieces. Hmmm… But The VAR Guy still wonders: Will Novell and Elliott Associates reach a buyout agreement in time for Novell BrainShare — a big customer and partner that starts March 21? Here’s some speculation.
A report by Bloomberg News suggested that Elliott Associates planned to buy Novell then potentially sell off some or all of the pieces. But a March 11 statement from Elliott Associates denied the report:
“The story that Bloomberg ran today was inaccurate,” the firm said. “Elliott has made no statement with respect to its intent regarding Novell. Elliott wants to own the company. Elliott has no plans to sell any business units and to report anything else would be erroneous.”
No Deal (At Least Not Yet…)
Of course, Elliott Associates first needs to “acquire” Novell before the hedge fund can actually decide to do with the company’s various assets — which range from SUSE Linux to identity and access management and data center software.
Novell has confirmed that it is evaluating an unsolicited takeover bid from Elliott Associates; the bid is valued at about $2 billion. The VAR Guy continues to believe that Novell will provide an update before BrainShare 2010 starts March 21 in Salt Lake City, Utah. If Novell doesn’t offer an update, the takeover bid could become a major distraction for Novell, partners, customers and annoying anonymous bloggers attending BrainShare.
The VAR Guy has also wondered if a white knight — IBM, HP, Microsoft, Oracle, or CA Inc. — would emerge to buy Novell. But the best potential fit on that list — CA, which has a bunch of security and system management synergies with Novell — seems to be out of the running, The VAR Guy believes.
The reason: CA just opened its wallet to acquire Nimsoft, the managed services software provider, for $350 million. The VAR Guy doubts CA would open its wallet even wider only a few days later to buy Novell.
Still, stranger things have happened in the software market.
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What is going to happen to Linux? What is going to happen to open source? What is going to become of all those Linux and tech patents that Novell has? Novell selling could be seen as a reckless move.
I think we all knew that Novell would end up this way. They still have a reasonable cash pile, but that isn’t going to last for much longer. Revenues have been consistently falling for years, and the new found Linux and open source revenue is not even making a dent at recovering what they’re losing in traditional Netware customers. However, if they sell the Novell division then they lose pretty all of their revenue straight away.
Elliot is a corporate raider. Nothing more. They have no interest in running, leading or managing Novell. It is inevitable that Elliot will break up Novell to recoup the investment. It’s all that can happen.
Segedunum: The VAR Guy tends to be a “glass half full” type of guy. Let’s see how the story plays out before assuming Elliott will (A) acquire Novell and (B) break up Novell. Our resident blogger still expects an update from Novell and Elliott in time for the BrainShare conference (March 21, 2010)… Just a hunch. But a strong one.
-TVG
I can only hope that someone comes in, slaps Novell round the head, and decides to run it properly. If that happens then there is some serious hope because that’s all Novell have been lacking, but the sands of time are running out.