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Attachmate To Acquire Novell In $2.2-Billion Deal

Novell is also selling "intellectual property assets" to Microsoft-backed consortium for $450 million, raising questions about Linux-related patents.

Novell is being acquired by Attachmate in a deal valued at approximately $2.2 billion, the companies said Monday.

Novell also said it will sell "certain intellectual property assets" to CPTN Holdings LLC, a consortium of technology companies organized by long-time Novell rival Microsoft for $450 million.

The pending sale ends the long run of what once was a software industry heavyweight and a major channel player.

Novell and Attachmate said they expect to complete the deals in the first quarter of 2011. The acquisition by Attachmate, set at $6.10 per share, requires approval from Novell shareholders and government regulators. The sale is also contingent upon the successful sale of the intellectual property to CPTN, which is also subject to regulatory approvals.

Novell did not disclose details about the intellectual property being sold to CPTN, but there is speculation it involves patents Novell holds relating to its Linux business.

Novell, based in Waltham, Mass., has been in play since March when it rejected a buy-out offer from investment firm Elliott Associates valued at approximately $2 billion. While Novell directors said that offer undervalued the company, it's been an open secret that it has been for sale – either as a single entity or split up. There have been reports of numerous companies, including VMware, IBM and Red Hat, as well as private investment firms, making bids for Novell.

"After a thorough review of a broad range of alternatives to enhance stockholder value, our board of directors concluded that the best available alternative was the combination of a merger with Attachmate Corporation and a sale of certain intellectual property assets to the consortium," said Novell president and CEO Ron Hovsepian, in a statement. "We are pleased that these transactions appropriately recognize the value of Novell's relationships, technology and solutions, while providing our stockholders with an attractive cash premium for their investment."

"We also believe the transaction with Attachmate Corporation will deliver important benefits to Novell's customers, partners and employees by providing opportunities for building on Novell's brands, innovation and market leadership," Hovsepian said.

Attachmate's Plans For Novell

Attachmate, based in Bellevue, Wash., said it plans to operate Novell as two business units, Novell and SUSE, and join them with its other business holdings. SUSE is Novell's version of the Linux operating system.

Attachmate develops software for terminal emulation, legacy software modernization, systems and security management, and application integration. Founded in 1982, the company was acquired by three private investment firms in 2005: Francisco Partners, Golden Gate Capital and Thoma Bravo and merged with WRQ, another host emulation software vendor. In 2006 Attachmate acquired NetIQ, a developer of systems management and security management software.

Novell may be best known for its aging NetWare network operating system that lost out to Microsoft Windows long ago. More recently the vendor has focused on the Linux market with its SUSE Linux, and software for what the company calls "intelligent workload management." Novell's ZENworks virtualization and systems management software and its Novell Identity Manager security application are thought to particularly fit with Attachmate's product lines.

The Novell acquisition "greatly complements our existing portfolio," said Attachmate CEO Jeff Hawn, in a statement that referenced Novell's "established record of innovation, impressive technology and brand assets, and a leading ecosystem of partnerships and talented employees."

"The addition of Novell to our Attachmate and NetIQ businesses will enhance the spectrum of solutions we can offer to customers," he said. "We fully support Novell's commitment to its customers and we look forward to continuing to invest for the benefit of Novell's customers and partners."

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