Bloomberg

Novell to be Bought by Thoma Bravo’s Attachmate for $2.2 Billion

Amy Thomson

Novell Inc., the maker of Linux operating-system software, agreed to be bought by Attachmate Corp. for $2.2 billion in cash, ending at least eight months of bidding.

Novell investors will get $6.10 a share, Attachmate, a software company owned by private-equity firms including Golden Gate Capital Corp., said today in a statement. That’s 9.1 percent more than Novell’s closing price on Nov. 19. Novell will also sell some intellectual-property assets to a group of technology companies led by Microsoft Corp. for $450 million.

The company started looking at strategic alternatives including a sale after rejecting a $2 billion takeover offer in March from shareholder Elliot Associates LP as inadequate. Attachmate, whose owners also include Francisco Partners and Thoma Bravo, said Novell products will complement a portfolio that includes other technology assets.

“Management had struggled over the last few years to grow the new businesses and that created an opportunity given all of the cash from the balance sheet for financial bidders,” said Rich Williams, an analyst at Cross Research in Livingston, New Jersey, who rates Novell shares “hold” and doesn’t own any. “The financially oriented buyers are going to hold the company, reshape it to a degree and then in a few years, in a more attractive environment, bring the company public.”

Novell has reported eight quarters of revenue declines and the company, whichcompetes with Oracle Corp. and BMC Software Inc., has said last year’s recession hurt customer orders. The company, based in Waltham, Massachusetts, had $1.04 billion in cash and short-term investments at the end of the third quarter.

Average Premium

Novell rose 36 cents, or 6.4 percent, to $5.95 in Nasdaq Stock Market trading at 10:26 a.m. New York time. It had gained 35 percent this year before today.

Besides Linux, Novell’s business units include identity and security management, systems and resource management, and workload-management products and its GroupWise e-mail system.

As part of the deal, Elliott will become a shareholder in Attachmate. Elliott was one of several parties in a 2006 buyout of Metrologic Instruments Inc., a maker of bar-code scanners. Elliott helped fund the 2009 acquisition of MSC.Software Corp. by private-equity firm Symphony Technology Group LLC.

The purchase price for Novell is 28 percent higher than the company’s stock price before Elliott’s March bid. The average premium acquirers offered for software companies in the past 12 months was 21 percent, with businesses that make software for enterprises the most popular targets, according to Bloomberg analysis of more than 1,000 deals.

The companies said they expect to close in the first quarter. Credit Suisse and RBC Capital Markets are acting as the financial advisers for Attachmate. JPMorgan Chase & Co. advised Novell.