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Hedge Fund Offers $2 Billion For Novell
CWmike writes "A hedge fund that is already one of Novell's largest shareholders offered on Tuesday to acquire the struggling, cash-rich enterprise software maker for $2 billion. The unsolicited offer, from New York-based Elliot Associates L.P., is for $5.75 per share in cash, a dollar per share more than Novell's closing price Tuesday of $4.75. The offer caused Novell's stock to leap 29% to $6.15 in after-hours trading. Because Novell is so cash-rich — it had $991 million in cash and equivalents at the end of January (PDF) — Elliott says the deal values Novell as an enterprise alone at about $1 billion."
WTF does Norton have to do with Novell?
a struggling cash rich enterprise.
OMFG I'm stupid. Got confused with Symantec :-/
Living With a Nerd
A law firm is already investigating 'potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover.' Basically seems to allege that should this deal go through, it would be unfair for current long time shareholders of Novell as Elliott's takeover would be underpaying and ripping them off. I'm not sure if this is standard operating procedure or not but one would think that the stock market would offer a good estimate of Novell's true worth. Apparently someone thinks 20%+ on top of that is unfairly low.
My work here is dung.
They both start with 'N' you clod!
From a pure financial play I don't see how paying 2 billion for 990+ million cash makes sense. The rest of Novel isn't really worth anything UNLESS, they turn Novel into another FLOSS services firm like RedHat.
That's what I think is planned.
Novell is widely admired and lauded for having nothing whatsoever to do with products from Symantec. And also for being secretly run by Chuck Norris.
Oops, I guess it's not secret any more.
Welcome to the Panopticon. Used to be a prison, now it's your home.
Novell's stock was up above $6 this morning, and I finally unloaded that sucker. Why would people be buying at above $6 when the buyout offer is $5.75? I guess people enjoy losing money.
If I have 5000$ in the bank, I certainly hope that my 'value' is at least 10000$, whatever than means, not being a resalable slave...
Non-Linux Penguins ?
beyond that norton is not novell, novell actually has a pretty strong enterprise presence. A hedge fund buying novell is a really bad sign, to be honest. Novell is doing fine. Them trying to label Novell as unsuccessful is basically a flat out BS.
What I suspect this means is that someone's trying to stop Novell before the Novell v. SCO case comes around. They're trying to see if the Novell board is greedy enough to do it, and I suspect they aren't and neither are the shareholders.
A hedge taking over a company if that hedge has no experience managing in the sector of the company they're taking basically means they're going to tack on association/management fees onto novell and dump them to someone else.
Where the hell did they get that kind of money? I guess that even during a recession people still need their hedges pruned and their bushes trimmed.
Summation 2
I expect that this will be tied up in the Canadian court system for a bit as well. I work a few kms from the former Nortel campus here in Ottawa and Nortel has been in the news for the past few months as it pensioners are basically receiving nothing as the company short funded the pension and eventually claimed bankruptcy. I fully expect that the legal team representing Nortel pensioners will do everything in their power to have a say in what happens to this company and should it be sold have existing pension liabilities settled.
They're both "old" companies that had a decent foothold in the LAN market, back in tha day. Very different products, but they were the two names you were almost sure to find in any network.
-Billco, Fnarg.com
I'll speculate that the phrase "potential breaches of fiduciary duty" is lawyer-ese for "your bid is too low".
No speculation needed. That is exactly what it most often means. The board of any company has a duty to maximize the return to any shareholders. Selling the company might be the best way to accomplish that - or it might not. Everything in finance is essentially a guess as to what will make the most money. It needs to be a well researched and reasoned guess but it is still a guess at the end of the day. If shareholders think they are getting a bad price it is entirely reasonable and proper for them to lawyer up and say so.
I actually researched Novell as a possible investment about 5 years ago and came to the conclusion that the company was in a slow death spiral. Not an inescapable one but I don't see them doing anything that gives me confidence they could escape it and their stock price hasn't budged since then. The price being offered is approximately the current market capitalization. (the market cap rose yesterday once the offer price was announced - arbitrageurs bought in to bring the price close to the offer price) Novell has a lot of cash and they have some decent products that have high switching costs which is keeping them in the game. But they aren't capturing much new business. Basically I think they'll end up getting sold in whole or in parts to Oracle, IBM or HP after the hedge fund is done stripping out all the cash from the company. Novell likely has undervalued assets that are worth more separately than together.
Disclosure: I am an accountant and I've worked on due diligence for the sales of companies.
Or Microsoft is behind this and they want full control of Novell...
Eh, the story is about Novell, and nobody has used the word Microsoft and Linux yet, and they usually go together with 'Novell'...
Oh, and the SCO vs Novell trial is still on the 'todo list' for the courts...
Who knows what is really going on here... People tend to think long and hard before offering to spend $2B of their own money...
--- Hindsight is 20/20, but walking backwards is not the answer.
ANd the hedge fund is secretly in cahoots with Daryll McBride. They plan to leverage "certain" IP that Novel owns.
Some drink at the fountain of knowledge. Others just gargle.
...are Novell products still well thought of in the enterprise sector? I know Norton became a bloated piece of crapware a while ago (just like most of their products), but I haven't really paid attention to them in...shit, almost 5 years.
Are they still producing bloated piles of crap, or have the leaned their products down and made them worthwhile again?
No. If anything, they are making them more bloated.
From a pure financial play I don't see how paying 2 billion for 990+ million cash makes sense.
Basically because the hedge fund is probably betting they can sell the assets of Novell for more than $1.1B. Groupwise alone in the right hands (HP or Oracle maybe?) is basically an annuity that might be worth that much. Novell has other products that are decent and probably worth something to the right party. My guess is that the hedge fund will strip out the cash and then sell the assets of the company to the highest bidder on the theory that the assets are worth more than the whole company.
The rest of Novel isn't really worth anything UNLESS, they turn Novel into another FLOSS services firm like RedHat.
Doubtful. Novell's value is in its installed base of software - not in their services. I don't think it could turn itself into a successful service company - better to sell to a large service company (HP, Oracle, IBM). I don't think they have the resources to transform themselves like that and if they tried I'd expect the shareholders to be pissed. Selling the company is probably the right play - the only question is what price can they get?
Novell has been taking good care of Suse Linux. Since Novell bought them, they continued working on what I think is the best Linux distro, without hindrance, boosted their marketshare and helped in giving Linux a corporate-friendly image. I hope the new owners of Novell (should such takeover really take place) will have a hands-off approach and let things chug along nicely, as they have been.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
Why would people be buying at above $6 when the buyout offer is $5.75?
Several reasons. Some of it is very likely a short squeeze which often happens when a stock suddenly appreciates significantly. Also there probably is some speculation that the final price will be a bit higher. I'd expect the price to quickly settle at just at or under the offer price.
if they do the normal "private equity" deal what is going to happen is they will buy the company and then "lend" it money from another one of their legal entities along with declaring special dividends. that cash is going to leave Novell and go into the hedge fund. a lot of people will be fired to free up cash that will go to the hedge fund. Once the IPO market becomes better they will sell the company to someone else or if Novell goes belly up they will write it off for the tax benefits.
i just had a chat with a sales rep and the big thing to sell this year is services. everyone is trying to sell services. probably because there is no more profits in hardware since everything is commodity. Services are high margin products and very cash rich. you pay some guy $40 an hour and pimp him out for $200 an hour.
I just saw the Altiris agent pop up on my work machine this morning. Our network weasels are busy virtualizing application installs. Good for them.
But Novell ZenWorks was doing this via layered imaging 7-10 years ago. Not to mention volatile Windows accounts, a Godsend in school environments. And other cool thing Novell did that Microsoft didn't.
But what caught my eye was that Altiris seems to have been gobbled up by Symantec. How sad. Now we fear the worst...
deleting the extra space after periods so i can stay relevant, yeah.
Anyone who's been a systems administrator for many years has probably dealt with Novell at one point or another in their career. Before Windows NT came on the scene, NetWare was pretty much THE PC file-and-print server solution. I remember one of the good things about it was that it was lightweight - command line UI, simple admin tools. Microsoft brought back this idea of command-line-only server consoles with Windows Server Core in the last version. Novell also has some pretty neat tools like ZenWorks. That said, it's interesting to see this potential deal on the table. Even 10 years ago, you'd never see Novell ready to throw in the towel.
I wonder why their acquisition of SuSE and the interoperability initiative with Microsoft didn't change their fortunes...they had a good plan for migrating all their NetWare customers to Linux. I know NetWare is still heavily used in European companies and in the health care sector, so you would think they have a willing customer base to pay the bills with. I guess they couldn't compete with Red Hat for distirbutions and IBM for support services in the Linux world.
It's a good lesson though -- no matter how much of a market dominator you are, you're always a few steps away from being destroyed.
I'm forced to use Novell enterprise software at work and while I'm not sure how it compares to other enterprise email/scheduling bundles I can tell you that it is far inferior to Google's offerings. The calendar is excessively clicky and unintuitive with an interface that looks like it hasn't been updated since the 80s. Contacts are equally strange. Email... I'm really not sure what a cabinet is supposed to be, why there is a separate folder for documents, and why sending emails into an archive throws them into a bottomless pit whence they rarely return. I'm reasonably sure that if companies weren't locked into Novell software and had more competent management so as not to get sucked into using Novell in the first place that Novell would be out of business.
mmmm...forbidden donut
Working for a medical university that still uses Novell:
It's a mixed bag, honestly. Groupwise is still pretty great as a messaging/collaboration platform, but for some reason Novell seems bound and determined to ignore it as much as possible. The latest Webmail version is pretty nice, but conversely, the Groupwise Mobile component is floundering, after trying to implement a version of Intellisync and getting cut off at the knees by Nokia. Novell has been moving the file system/server stuff to SUSE for some time now, but on the other hand, no one seems to really know exactly what to do with all those damn Windows clients long term. As for eDirectory, it's great and all, but if no one's using Groupwise or moving to SUSE, what future does it really have?
If I live a thousand years I'll never understand why Novell didn't open source Groupwise several years ago, and in one move come to dominate the Linux Groupware market. Perhaps smarter people than me at Novell foresaw the move to online services, but I doubt it; at the very least they could have spun it off to another company and made some bucks on it. It would arguably still be a good idea, as I could see it filling a niche, but probably the real opportunity has been lost.
We're moving away from almost all things Novell. Investigated the possibility of both Outlook and Outlook@EDU, and while those stalled, the writing is on the wall. NDS client will probably be off all workstations within a couple years, file sharing/password management will be moved to Windows servers. eDirectory/Novell Services may linger on for a while, as we've got a semi-complicated identity management system going on it, and we've rolled out some SUSE as necessary, but we're almost being forced to move things Windows-way out of necessity/attrition.
The cabinet is just where you place your own user-created folders. Stuff placed in archives shouldn't just "disappear". It sounds like your IT department just isn't doing a great job of administrating Groupwise or training their users. Trust me, it's way better than Notes and a lot more stable than Outlook. Just the fact that most users can actually figure out how to set their out-of-office message when they go on vacation is amusing. Doing this in Outlook is laughably difficult.
Gamingmuseum.com: Give your 3D accelerator a rest.
with china being the biggest debt buyer, chances are pretty good that ...
most of the money in this hedge fund belongs to china.
so buying the "novell-cow" and chopping it up is probably a pretty
good way to make "more" money and the american internet less secure
i hope that chameleon can blend
"I wonder why their acquisition of SuSE and the interoperability initiative with Microsoft didn't change their fortunes..."
Because Microsoft stole Novells customer base from Windows95 onwards. Basically by duplicating Netware functionality and being less than co-operative in giving Novell access to technical information. That they failed to suceed with SuSE owes a lot to bad management. The Microsoft deal being the end game as far as Novell ever becoming a serious player again.
Yea, because all those hedge funds like to buy companies that are going straight down (???)
They might be interested because they expect the company's value to go up (gasp!!).
I realize you are an expert, but when was the last time you didn't do heavy investigation before spending 2 billion dollars?
Our operation uses GroupWise because it would cost too much to switch to Exchange.
What else is Norton gonna do ? M$ assimilating everything Norton has done. Perhaps Norton will finally have something to slay the Borg with.
At this point, hedge funds are unable to flip companies for a quick profit. Cash rich does not mean capital asset rich that they can sell off and leverage the company to a decent debt/equity ration. So I would guess that a hedge fund that is already a major shareholder and has been for several years is certainly in this for a 5-7 year stretch while they buy up a few other companies, merge them, and probably re-list the new enterprise.
but then again, who am I. I just do this for a living.
Read what I mean, not what I wrote.
A hedge fund buying novell is a really bad sign, to be honest.
Yea, because all those hedge funds like to buy companies that are going straight down (???)
They might be interested because they expect the company's value to go up (gasp!!).
I realize you are an expert, but when was the last time you didn't do heavy investigation before spending 2 billion dollars?
one word: Chrysler.
"Novell has been taking good care of Suse Linux. Since Novell bought them, they continued working on what I think is the best Linux distro, without hindrance, boosted their marketshare and helped in giving Linux a corporate-friendly image. I hope the new owners of Novell (should such takeover really take place) will have a hands-off approach and let things chug along nicely, as they have been"
Didn't a third party, some time back express 'intellelectual property' claims over all versions of Linux, signing an exclusive deal with Novell, wherein the third party would exchange 'vouchers' in exchange for Novell acknowledging that the third party IP claims had validity. In publications on it's website, Novell recommends Microsoft Windows and advises customers to use SuSE for IP peace of mind. And while Novell provides cross-platform interoperability, it only provides it with Windows and denies it with other Linux distros. In short, they have conspired with Microsofts in its IP extortion racket against the Open Source community.
"Technical solutions spur continued success of joint effort to advance cross-platform interoperability and deliver IP peace of mind"
Buy our stuff, or someone we don't know will sure your ass off !
Your Calendar is not as bad as Oracle Calendar, Period.
Wow. Daryll McBride vs. Chuck Norris.
Does having a witty signature really indicate normality?
I heard a story on NPR about companies that use leverage to buy out companies with a good name, and somehow have the company they are buying go deeply into debt to finance it. The company cuts costs like mad to quickly come up with the cash to pay off their huge debt, cutting things that were substantial to what earned them a good name. ( the example was matress companies moving to one sided matresses which don't last as long to cut costs, destroying their reputation for producing products that last. But the company is then resold before the impact of it's cost cutting causes it to lose value. Novell is cash rich, so maybe it could use that cash to pay for much of it's own aquisition cost, but then it loses it's ability to think in the long term ( need to make money NOW ).
It was too bad since suse linux is really nice. Way better than redhat.
Still I don't know if that is what's going on here. It just seems suspiciously like it.
...
Umm? Do you even realize who this hedge fund is? I'm going to copy from groklaw here.
Sounds like no, my sarcastic friend. Elliott is run by Paul Singer. Link states:
Also from the NYT
.
I didn't have to read either of those to already know that. Notice from the NYT: Vulture fund.
Meanwhile, what's the kicker?
The shareholders are pissed already and think it's BS/hostile takeover. from that link:
So umm, whoops?
Yes, cash rich does not mean capital asset rich. However, novell is not a LP, so you know, they have a ton of capital assets. I'm not saying they're doing gloriously, but they're not exactly nearing bankruptcy as a company either right now.
However, that part about hedges being unable to flip? BS. It still happens, still exists, and is still legal on the books. So I don't know where you make your shit up. But what do I know? Family members are CPAs and others are risk analysis and confirmed it's still common. It'll be unable to be done when people are unable to cook the books, which last time I checked, still goes on constantly and in many ways via strategic acquisitions.
Yes, there are ways they can take over the company anyway, but they have not positioned themselves accordingly in this case.
The timing for this being so close to the SCO vs Novell case is no accident.
It's too early.. IIRC the Microsoft--Novell "I won't sue your customers[*] with my massive patent portfolio which you had to publicly agree was valid, for a limited number of years" agreement only runs out next year.
Curious what will happen though.. maybe even nothing!
[footnote *: a patent is a grant of monopoly, you can sue, or withold a license, or charge very much for a license, to whomever you pick. End-users are NOT exempt unless indemnified.]
To be, or not to be: isn't that quite logical, Slashdot Beta?
J.K. Rowling is raking in the bucks, but this is ridiculous!
Set your phasers on "funky"!
I only work tangentially with finance, but doesn't a hedge fund being interested in meddling with a business imply that they think that some form of restructuring would improve the value of the business?
Novell has a number of different lines of business that don't appear to be particularly well integrated. Isn't it possible that chopping Novell up and selling these different lines to companies that can better merge them into their strategy would be a net increase in value?
They have some things that are worth something, but the company as a whole is stagnant from what I can tell.
DOES THIS MEAN!?!? WHAT WILL HAPPEN TO SUSE?
(Filter error: Don't use so many caps. Filter error: Don't use so many caps.)
Entertaining aren't you. Asset-flipping has pretty much been exhausted with the average investment hold times of hedge funds rising to 5 years. This is a direct response to the lack of low hanging fruit.
Where I get my data from is hard research completed in the last year by Harvard Business School Review, McKinsey Quarterly, and The Boston Consulting group etc.
You asked a CPA? An accountant? Are you kidding me? Ask a CFA, MBA, CAIA and their kind, preferably one who works in a hedge fund.
Or better yet stop using expletives to illustrate your heavy dependence on others' educations instead of your own. Get an MBA, and get your CFA and then you can tell me about what you "know".
Read what I mean, not what I wrote.
I'm busy at work, so I won't be reading your post.
and groklaw sucks. I could have been a lawyer, but because of your kind, this country is falling apart. There are too many lawyers. Go sue somebody for 'animal rights' because they lightly smacked their dog or something. Embrace the scumbag inside you!
well I do apologize if using the phrase BS insulted you or was considered an expletive. If it did, that was inappropriate and I do apologize. I do not intend to be ad hominem, even if I disagree with your statements.
Simmons (bedding) declared bankruptcy less than 6 months ago. They were flipped. Care to go read the DNB on them? I don't know if I'd call that a lack of low hanging fruit, even by any stretch. Remind me if it was a hedge or not? Oh right, here - http://www.newser.com/story/70949/simmons-bankruptcy-study-in-private-equity-run-amok.html
Lack of low hanging fruit? I'd say not at all. I was hoping I wouldn't have to mention by the way, that the CPA is also a CFA, and also does risk analysis. A separate family member is risk analysis only and I don't even know what certs they have. Most people do tend to go for a CFA after a CPA if they aren't stupid. I can tell you are knowledgeable about accounting, but wow. I hoped you would figure that part out from the relations - I am not trying to pull some sort of elitism or "holier than thou", I'm just saying I do tend to try to verify information before I make some sort of statement.
so you're too busy to read my post but you just read it? good job sir. I assume you meant for your post to be anonymous? If not, your sarcasm is pretty weak.
Just the fact that most users can actually figure out how to set their out-of-office message when they go on vacation is amusing. Doing this in Outlook is laughably difficult.
Laughably difficult? What crack are you smoking? You click Tools > Out of Office Assistant. The only way it could get any easier is to have the application read your mind and prompt you with a dialogue when it recognizes that you are thinking about vacation.
but we're almost being forced to move things Windows-way out of necessity/attrition.
What is the necessity that is driving you onto Windows? I'm curious because I started my professional IT career working on Netware (3.12 and 4.11). I spent the better part of the last decade working with Windows. My boss who ran the consulting firm I was working for had originally been a Netware guy and saw the writing on the wall with regards to Windows and the Microsoft behemoth. It is interesting to me that in this day and age, people are still looking at a switch to Microsoft as a necessity in face of open source solutions.
i didn't read it, i got to groklaw and quit.
but whatever, it's ok, i forgive you.
quit wastin my time dude. shouldn't you be busy doing arpaio's work down in arizona?
quit wastin mine.
also, no idea what 'arpaios' is...
Unfortunately I suspect the only way to achieve this is to change the name and dump half the company in favour of marketing.
They have some of the best software in their fields in Suse, IDM, Zenworks, Platespin and a good vision but not the resource to support it properly. They market themselves worse than anyone in the market and always have. Worse, the shame of it is that every time you hear about Novell people think about a company from the 1980s that had Netware which, whilst great in its hey day became a turd when they tried to pretend it could do something other than file serve. The bugs have been thick and fast ever since.
Open Enterprise Server is another turd - take a good linux and make it run like Netware. Forget it, eDirectory spat on AD but wasn't compatible enough with Windows services (I wonder why MS prevented that?)... These technologies are dead and I think even Novell recognises it (Zenworks now uses Oracle/Microsoft SQL Server instead of eDirectory and the like).
After being a long time user of Novell products I have to say, their Linux is great, their Desktop Management and Virtualisation Management is really very good (as it manages Hyper-V, VMware and Xen heterogeneously - including, with platespin all the conversion capabilities), their Identity Management talks to a ton of things and works unlike everyone else's that I've used but their old core (Netware, NCP) and associated technologies needs dropping like the steaming turds they are. Then they need to be able to sell in competition with the rivals which they've never managed.
I have to say that this might be the best thing that has ever happened to them if it acts to focus them...
Take it!
Umm? Do you even realize who this hedge fund is? I'm going to copy from groklaw here.
Sounds like no, my sarcastic friend. Elliott is run by Paul Singer. Link states:
Also from the NYT
.
I didn't have to read either of those to already know that. Notice from the NYT: Vulture fund.
Meanwhile, what's the kicker?
The shareholders are pissed already and think it's BS/hostile takeover. from that link:
So umm, whoops?
Does anyone smell Microsoft here?
I tried it on mine, but it told me I was working offline-- although I wasn't. Bugs aside, it's not easy, Mr. Crack Dealer. First, you have an ambiguous date dialog, from what I recall. It doesn't indicate whether you're entering the first and last days of the time off or the first and last days outside the time off. Second, you have to assemble an out-of-office message that will probably end up being stored locally, resulting in double responses being sent. Third, by default it will respond to CCs, which is stupid and rude. To really set up a proper message, you have to manually set up rules.
Gamingmuseum.com: Give your 3D accelerator a rest.
It sounds to me like you haven't even really used it before. What are you talking about ambiguous dates? It doesn't support dates. Once you activate it, it is on. The FIRST time someone sends you a message, they get the out of office message. Every subsequent message from the same person does not trigger it (including cc actions). What are you talking about double responses? I've never seen double responses, and again it leads me to believe that you've never even used the functionality you're complaining about. Even if you respond to a sender but leave your OoO message on, when they reply back to you, they won't receive the OoO message. Lastly, once you come back to the office after being away, Outlook asks you if you want to turn it off.
The function is brain dead simple to use.
What if this private equity group then bought SCO, or SCO's "Unix IP" whatever that might be, and then went back to the better-license-or-we'll-sue business with the "Unified System V intellectual property"?