Novell Rejects $2 Billion Buyout Offer From Investment Firm


Novell has rejected a $2 billion buy-out offer from investment firm Elliott Associates L.P., saying the offer "undervalues the company's franchise and growth prospects."

Novell issued the rejection in a press release Saturday. Company president and CEO Ron Hovsepian, delivering a keynote speech at Novell's BrainShare conference in Salt Lake City Monday, echoed the language in the rejection notice by calling the Elliott offer "inadequate" and saying it undervalues Novell.

But Novell did not rule out a higher acquisition bid from Eliott or any other potential acquirer. The company said its board of directors has "authorized a thorough review of various alternatives to enhance shareholder value," and said those alternatives could include "a stock repurchase or cash dividend, strategic partnerships and alliances, joint ventures, a recapitalization and a sale of the company."

The company will not disclose developments while it explores those alternatives "unless and until the board has approved a specific course of action."

Elliott and its subsidiaries, which already own about 7.4 percent of Novell stock, disclosed March 2 that it had made an unsolicited offer to buy all of Novell's outstanding shares at $5.75 per share or approximately $2 billion in total and take the software company private. Elliott made the offer in a letter to Novell.

Saturday's rejection of the Elliott offer marked Novell's first formal response to the buyout bid.

Hovsepian opened his speech Monday by referring to the Elliott bid as "the elephant in the room" and made light of the situation by displaying on the huge screens behind him a picture of himself sitting on a couch beside a large elephant.

Hovsepian told BrainShare attendees that the Elliott takeover bid had had no impact on Novell's day-to-day operations.