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Novell Said To Be Closer To Sale Of Company

Report says Linux business to be split off and sold, with the rest of company going to a private investment firm.

Novell is just weeks away from concluding a deal that will split the company in two with its Linux business being sold off and the rest of the company being acquired by a private equity firm, according to a published report.

Wednesday the New York Post quoted "people close to the process" as saying Novell had decided in principle to sell its SUSE Linux business to one company and the rest of Novell to another buyer. While the story said Novell was still three to four weeks away from a deal, it also said the negotiations were ongoing and could still break down.

The story did not identify the prospective SUSE Linux buyer. There has been speculation that IBM, Linux software vendor Red Hat and virtualization technology developer VMware might be bidding for the Novell business.

Along with its Linux business, Novell sells a range of identity and security management, collaboration and IT management software products. Earlier this week it formally debuted its Cloud Manager for building and managing cloud computing systems.

In March investment firm Elliott Associates made an unsolicited bid to acquire Novell for $5.75 per share, or approximately $2 billion. Several weeks later Novell executives, speaking at the company's BrainShare conference in Salt Lake City, rejected the Elliott offer, saying the bid "undervalues the company's franchise and growth prospects."

But the company indicated that it would entertain higher bids from Elliott or any other company and said it had hired J.P. Morgan to advise it on its financial options. Since then there have been reports that as many as 20 companies have expressed interest in acquiring all or parts of the company.

Novell has not commented on the reports. When they announced the plan to explore sale options for the company, executives said there would be no further comment until a final deal was concluded.

Last month Novell, reporting its third-quarter financial results, said uncertainty over the company's future was beginning to take a toll on sales.

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