WILMINGTON, Del Jan 4 Novell Inc directors who
approved the information technology company's 2010 sale for $2.2
billion must defend a lawsuit that alleges they unfairly favored
Attachmate Corp over other bidders.
The shareholders brought a reasonably conceivable claim that
the directors acted in bad faith based on their "unexplained,
extremely favorable treatment of Attachmate," Delaware Court of
Chancery Judge John Noble wrote in a 50-page opinion. His ruling
on Wednesday will allow the case to proceed.
Novell's board agreed in November 2010 to sell the company
to Seattle-based software firm Attachmate for $6.10 per share.
As part of the deal, Novell also agreed to sell a collection of
patents to a group led by Microsoft Corp for $450
Novell shareholders, led by pension funds for Oklahoma
firefighters and Louisiana police, sued and alleged that the
board did not allow another potential buyer, which initially had
the higher bid, to partner with others as Attachmate did.
Attachmate was also told of the simultaneous patent sale, while
the other bidder was not.
Bret Fitzgerald, a spokesman for Novell, which is based in
Waltham, Massachusetts, d eclined to c omment.
Judge Noble refused the directors' request for an early
dismissal, and the case will now proceed to trial where the
defendants can present evidence and testimony to counter the
plaintiffs' claims. Many investor lawsuits settle after
surviving a motion to dismiss.
However, Noble did dismiss claims against Attachmate and
Elliott Associates. The hedge fund had been accused of gaming
the sale of Novell to get what plaintiffs said was nearly $10
per share for its 7 percent stake in the company. Elliott's
unsolicited bid for Novell jump-started the sale process and the
hedge fund helped finance the deal with Attachmate.