Novell Confirms Hedge Fund's $2 Billion Buyout Offer
Unsolicited proposal from Elliott Associates L.P., holder of 8.5 percent of Novell stock.
Novell Inc., a maker of enterprise software, confirmed that it has received an unsolicited, conditional offer from Elliott Associates L.P., an institutional shareholder of 8.5 percent of Novell common stock, to acquire the company for $5.75 per share in cash.
In a letter to Novells board of directors, Elliott said that its offer for Novell constitutes a premium of 49 percent over the companys current enterprise value and 77 percent over the companys 90-day volume-weighted average enterprise value.
Elliott said that the per share offer amounted to a 37 percent premium over Novells closing stock price on January 4, 2010--the last trading day before Elliott began actively acquiring the vendors common stock--and a 20 percent premium over Novells closing stock price on March 1, 2010, the day immediately prior to the offer letter.
Novells financial records list Elliott as its third largest institutional shareholder, controlling some 24.7 million shares currently valued at about $122.5 million.
Elliott said that it has been following Novell for a considerable period of time, observing that managements moves to arrest the companys sliding fortunes have largely been unsuccessful and that its stock has meaningfully underperformed all relevant indices and peers.
Novell said in a statement that its board will review Elliotts offer in consultation with its financial and legal advisors.
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