(Refiles to correct spelling to Attachmate, paragraph 3)
* Deal values Novell at $6.10/share
* Private equity group to buy most of company
* Price includes $450 mln patent sale to Microsoft group
* Novell shares up 6.6 pct, but stay short of sale price
(Adds details throughout, previous dateline NEW YORK)
By Jim Finkle
BOSTON, Nov 22 Novell Inc NOVL.O will sell
itself in a complex $2.2 billion deal that includes the sale of
key patents to a consortium led by Microsoft Corp and ends a
months-long auction that frustrated investors.
Most of Novell, a pioneer in computer technologies, will go
to Attachmate Corp, a data center software maker owned by an
investment group led by Francisco Partners, Golden Gate Capital
and Thoma Bravo.
Attachmate will pay $6.10 a share, a slim premium to last
week's close -- but 28 percent more than Novell's price in
early March just before it disclosed an unsolicited offer from
another investment group.
Attachmate's actual cost will, however, be about $650
million after accounting for Novell's approximately $1 billion
of cash and the $450 million from the patents sale.
Shares of Novell -- which was on the selling block for
months before it secured final agreements -- rose 6.6 percent
to $5.96 in the afternoon, still a shade below the offer
The agreement follows Novell's rejection in March of an
unsolicited proposal from private equity firm Elliott
Management. That bid kicked off an auction for the troubled
maker of software that big corporations use to operate their
The deal -- which is conditional on Microsoft's purchase of
patents -- also calls for Elliott Management to take an
undisclosed equity stake in Attachmate.
Novell's crown jewels include a popular version of the
Linux operating system and software that companies use to
monitor employee identities. It also sells a corporate email
program and Unix operating system, but sales of those are on
"It's a combination of some declining businesses and some
growth businesses. I think it's fairly priced," said Jefferies
& Co analyst Katherine Egbert.
THE RETURN OF ELLIOTT
Novell engineered the deal after spending months reviewing
offers in its various assets from potential buyers, including
questioning whether it should remain independent.
"The board explored all alternatives ... and found this to
be the best value for our shareholders," Novell Chief Executive
Ron Hovsepian said in an interview.
Both deals are expected to close in the first quarter of
Novell and Microsoft did not disclose which patents will
change hands. Microsoft declined to identify the other
companies in the coalition.
Novell, which was founded in 1979, has been a pioneer in
key computer technologies over the past three decades including
networking, Unix operating systems, email software and, more
recently, the Linux operating system.
Eben Moglen, a professor at Columbia Law School and
founding director of the nonprofit Software Freedom Law Center,
said he suspected that some of the unknown patents could be
related to technology used by open source programmers.
Open source software refers to computer programs licensed
under contracts that generally allow developers to work with
them and distribute them at no cost. That is designed to foster
innovation in computing.
"The threat is that commercial users or distributors who
can pay royalties will be asked to pay royalties, and the
nonprofit community-based sector that actually produces the
innovation and which cannot pay royalties or accept conditions
on distribution will be hobbled, interfered with or impeded,"
Moglen said in an interview.
Attachmate plans to operate Novell as two units, Novell and
SUSE Linux, along with its other holding NetIQ and expects the
resulting company to have revenue of about $1 billion a year.
Jeff Hawn, the CEO of Attachmate, said his company expects
to generate some savings as a result of the deal, possibly
through job cuts, but he declined to give details.
JPMorgan was Novell's financial adviser and Skadden Arps,
Slate, Meagher & Flom was its legal adviser in the agreement.
Attachmate used Credit Suisse and RBC Capital Markets as
financial advisers and Jones Day as legal adviser.
(Additional reporting by Sinead Carew and Nadia Damouni;
Editing by Edwin Chan, Derek Caney, Matthew Lewis and Steve