Novell Confirms Hedge Fund's $2 Billion Buyout Offer

March 3, 2010

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 Novell’s board of directors, Elliott said that its offer for Novell constitutes a “premium of 49 percent over the company’s current enterprise value and 77 percent over the company’s 90-day volume-weighted average enterprise value.”

Elliott said that the per share offer amounted to a 37 percent premium over Novell’s closing stock price on January 4, 2010--the last trading day before Elliott began “actively acquiring” the vendor’s common stock--and a 20 percent premium over Novell’s closing stock price on March 1, 2010, the day immediately prior to the offer letter.

Novell’s 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 management’s moves to arrest the company’s 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 Elliott’s offer in consultation with its financial and legal advisors.