Same old, same old at Novell?

Contact: Brenon Daly

Ever since hedge fund Elliott Associates put Novell in play five months ago, we’ve said that the company was going to be a tough sell. It’s a mixed bag of businesses, both in terms of what those businesses sell and how they perform. (Or rather, how those businesses underperform, as we were reminded by Novell’s warning earlier this week about third-quarter results. If nothing else, that kept alive Novell’s streak – it also came up short in the two quarters leading up to Elliott’s run at the company.)

Undoubtedly, Novell – an underperforming company that nonetheless found its treasury stuffed with more than $1bn of cash – offered an easy target for the gadfly investor. But having that agitation turn into an acquisition is proving much more difficult. (We recently took an in-depth look at Novell, as well as the specific business lines and which suitors might be eyeing them, in a special report.)

While the process initially attracted a number of parties, we understand that there are only three left at the table: a private equity-backed company, a UK-based PE firm and a joint bid between a publicly traded tech company and a buyout shop. It’s not clear that any of the three will actually close a deal for Novell. (The process has already run past two deadlines, we gather.) Without a deal, shares of Novell would be left to trade on the company’s own merits, which probably wouldn’t do much for shareholder value.

Novell timeline

Date Event
March 2, 2010 Elliott Associates launches unsolicited bid of $5.75 per share, or $2bn equity value
March 20, 2010 Novell board rejects Elliott’s bid, retains JP Morgan Securities to explore alternatives

Source: The 451 M&A KnowledgeBase