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Investment Firm Bids to Buy SCOs UNIX Operations
WebCowboy writes "It appears that there are still enough people out there deluded enough to see value in SCOs UNIX operations. York Capital Management has put in a $36 million bid for SCOs UNIX operations. The offer includes coverage of up to $10 million for payment of legal fees and York Capital would assume ownership of the disputed UNIX IP as well as what is left of the lawsuits.
Interestingly, SCO has offered this up for competitive bid (who would want to though?). Upon completion of the transaction, should bankruptcy court approve, SCOX would become solely a mobile applications provider (which is the only part of SCOs offerings that have undergone any meaningful development for quite some time)."
As it is, SCO owes Novell loads of money. Can Novell stop this sale and/or get the money?
I prefer the "u" in honour as it seems to be missing these days.
York Capital Management is a hedge fund management outfit. They are not going to be breathe any life into SCO. They are going to tear it apart and sell off what they can and try to make a profit over and beyond the 30+ million they are intending to invest.
If they didn't see any upside here, they wouldn't have made the offer. You can bet SCO's got something of value that York will be able to sell off at a tidy profit.
I just hope that the bidder doesn't think that it's the IP. There is probably enough SCO support work out there to make a viable business though, if there are people who are still paying for their support.
I wonder how many degrees of separation there are between this new firm and Microsoft? MS has employed some wonderfull machinations in the past to further fuel tSCOg legal battle, and now when the battle is finally lost, up comes another firm offering some golden parachutes to the management?
Somehow I remain unconvinced that those responsible will be punished. The nuclear option seems pretty good to me, but I don't think the US would appreciate a 30 mile crater where Redmond used to be.
This space is intentionally staring blankly at you
Support contract for already installed Point Of Sale devices. This is the only SCO operation I know of, that was workable.
They could compete against Microsoft based on price in this sector.
There might be other places with installed SCO base - and there is money to be had from there, either from continuing support or from help with migration to another platform
This is basically a private equity buyout. Private Equity is the big buzzword in the world of big money at the moment. What generally happens is that the buyer sees a company which it feels is underperforming and has a depressed share price, and offers a good enough price for it that the shareholders can't refuse. The money all comes from bank loans, which are secured on the company being bought -- a bit like a mortgage is secured on the house you're buying -- so as long as the bank agrees to the loan, it doesn't actually cost the buying company anything up-front. Once the purchase has gone through, they buying company needs to get the money to pay off the loan. This money comes from making savings at the company they've bought. Typically this would mean asset stripping, re-organising, selling off product lines and divisions, or whatever else it takes to make the money back. Wholesale redundancies are also almost certain. When a reasonably solid, viable company is bought out by private equity, they usually end up getting transformed into a much leaner and smaller company, and getting sold on again in the space of a couple of years. When it happens to a company that isn't solid and viable, the private equity firm will generally just sell off all the assets of the company, aiming to make a profit on the purchase price, and then quietly close down the husk that remains. This is what I predict will happen in this case. The buyer is looking at the assets -- the Unix operating system, the patents, licenses, and all the rest, and they've decided that it's worth more than $36 million. Of course, the strategy only works if there are people out there willing to buy the assets for more than $36 million. I suspect there probably are. Even with the lawsuit results, there is enough left to cherry pick. You can be pretty certain they'll get rid of the lawsuits as quickly as they can; they're paying a block of lawyer fees up front to secure the purchase, but they won't want to pay any more, as it'll eat into the profitability of their bid. The law suits would require a long-term strategy, but a buyout like this will be geared solely toward making a short-term profit. The asset management company certainly won't be buying any of their debts, so the $36 million goes to the remaining SCO company (SCO Mobile? I guess they'll rename themselves to try to get rid of the burden of the name SCO). Pays off their lawyer bills, pays off their debts to Novell and other creditors, maybe even leaves them with a few pennies to rub together at the end if they're lucky, leaving SCO Mobile as a theoretically viable (albeit not particularly valuable) company.
You know, it's articles like these which demonstrate why Slashdot's become less than necessary reading these days.
Whatever SCO (the company) has done to Linux, SCO's UNIX systems were alright. They weren't fashionable, but, they have a working kernel and standard user-land utilities. Obviously, the SCO IP isn't quite as fresh as it once was, but, there'd still be gems to be mined. They also (still) have a (declining, but, still present) bucket of support contracts.
In a market where Facebook (without an obvious revenue stream) is valued in the billions, you'd have to be an unbalanced zealot to suggest they couldn't raise $34M for their entire UNIX related IP collection. Sure, it's not been selling well in the last couple of years, but, you should never judge the quality of a product by the skills of the salesmen.
"JGD Management Corporation has its principal executive offices at 1118 East Green Street Pasadena, California 91106 (http://www.secinfo.com/d12TC3.v51a.htm)
If you google the address the first match is a reference to a page on Edgar which provides the Form 4 (any of you US business types know what that is?) for a comany known as Arrowhead Research Corp which has one R Bruce Stewart as its CEO and Chairman of the Board.
(http://edgar.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?Sessi onID=T-hII2bI2EHwHrP&ID=3669175)
R Bruce Stewart founded Acacia Research Corporation in March 1991. (http://www.forbes.com/finance/mktguideapps/personinfo/FromPersonIdPersonTearshe et.jhtml?passedPersonId=927443).
Has anyone heard of Acacia Research before?
Hmmmm.
It has to be a coincidence."
The SCO thrust caught fire, blew up and is sinking at a respectable clip. Since it became obvious that this would happen (sometime in the summer), SCO's puppet masters had them "re-focus" their business into "mobile solutions". We should all know that "mobile solutions" is where shitty ideas and companies re-focus in order to perhaps get a little bit more investments in; therefore we can consider that SCO is basically a walking corpse at this moment.
This "Unix IP" sale is so that SCO can be permitted to sink and Novell & IBM may attempt to get their butter & 2K monies (as in JA I AM MADE OF) from a shell of a shitheap, if they can. Once the "Unix IP" package is moved elsewhere, SCO's puppet masters may attempt to re-do this whole operation in a few years in a more favourable legal environment and perhaps a judge that is more "reliable" (i.e. in their pocket).
There's a minor hole in this coreography though. If 6 million has been offered for the "Unix IP" parcel, then it should be obviously outside the group of stuff that SCO may hammer to get out of deep red again. The money from the sale would obviously go to pay executive salaries (some 80,000$ a month, is it?) and lawyer fees (well past 5 million US$, I reckon). I suppose we'll see whether the SCO chapter 11 trustee is in the puppeteer's pocket or not.
I must say that Microsoft planned this one out pretty well. Of course their plan relies on corruption to smooth the way so that their side can execute their moves quicker than the opposition, as always, but still.
Acacia = "InterActive Group" = "Arrowhead Research" (= Msft?)
"On May 29, 2007, we [Arrowhead Research] sold to certain institutional and accredited investors an aggregate of 2,849,446 shares of common stock (the "Private Placement Shares") at a per share purchase price of $5.78, and Warrants to purchase up to an additional 712,363 shares of common stock (the "Warrant Shares"), exercisable at $7.06 per share, in the Private Placement. Two investment vehicles of York Capital Management, a stockholder holding greater than 10% of the Company's Common Stock, participated in the offering."
http://www.secinfo.com/d14D5a.u4d4r.htm
"Arrowhead Research" refers to Arrowhead Research Corporation, a Delaware corporation and formerly known as InterActive Group, Inc."
http://www.nasdaq.com/asp/symbols.asp?exchange=NGM&start=A&sort=cap&Type=0
"The consolidated financial statements include the accounts of Arrowhead Research Corporation (a Delaware Corporation), formally InterActive Group, Inc., and Arrowhead Research Corporation (a California Corporation), a wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
. . . .
In October 2003, in connection with an initial private placement of Common Stock, the Company [Arrowhead Research] accepted 80,255 shares of Acacia Research Corporation, valued at $500,000, and $500,000 cash in exchange for 1,000,000 units. The shares are carried on the financial statements as marketable securities. See Note 3."
http://sec.edgar-online.com/2004/05/17/0001015402-04-002107/Section7.asp
"On May 29, 2007, we [Arrowhead Research] sold to certain institutional and accredited investors an aggregate of 2,849,446 shares of common stock (the "Private Placement Shares") at a per share purchase price of $5.78, and Warrants to purchase up to an additional 712,363 shares of common stock (the "Warrant Shares"), exercisable at $7.06 per share, in the Private Placement. Two investment vehicles of York Capital Management, a stockholder holding greater than 10% of the Company's Common Stock, participated in the offering."
http://www.secinfo.com/d14D5a.u4d4r.htm