Utah impact of Novell sale to Attachmate still to play out
Attachmate Corp. CEO Jeff Hawn said Monday he likely will be visiting the Provo office of Novell next week as part of planned acquisition of the company that got its start in Utah.
But Hawn said plans for the Utah office haven't been formulated, and he could not yet say what the $2.2 billion deal will mean for the Provo office. That facility is Novell's biggest with about 1,380 employees.
When the acquisition closes, likely early next year, Novell will be split into two parts: an SUSE unit that is based on the Linux operating system and Novell, which offers products to manage businesses' computers systems, including identity management and security. Hawn said the Provo office would be part of the Novell unit but said details like who will run that portion of the company and where it will be headquartered have yet to be worked out.
"All of that is to be determined during integration planning," Hawn said in an interview.
The deal ends at least eight months of bidding for Novell.
Investors will get $6.10 a share, according to a statement issued by Attachmate, a software company owned by private-equity firms including Golden Gate Capital Corp. That's 9.1 percent more than Novell's closing price onFriday. Novell will also sell some intellectual-property assets to a group of technology companies led by Microsoft Corp. for $450 million.
Novell was founded in 1979 in Provo as Novell Data Systems. Its headquarters were moved to Waltham, Mass., in 2004. The company's software that runs computer networks catapulted it to prominence and profitability. It was not immediately known what impact the sale might have on the company's offices in Provo, where 1,380 people are employed.
The company started looking at strategic alternatives including a sale after rejecting a $2 billion takeover offer in March from shareholder Elliot Associates LP as inadequate. Attachmate, whose owners also include Francisco Partners and Thoma Bravo, said Novell products will complement a portfolio that includes other technology assets.
"Management had struggled over the last few years to grow the new businesses and that created an opportunity, given all of the cash from the balance sheet for financial bidders," said Rich Williams, an analyst at Cross Research in Livingston, N.J., who rates Novell shares "hold" and doesn't own any. "The financially oriented buyers are going to hold the company, reshape it to a degree and then in a few years, in a more attractive environment, bring the company public."
Novell has reported eight quarters of revenue declines and the company, which competes with Oracle Corp. and BMC Software Inc., has said last year's recession hurt customer orders. The company had $1.04 billion in cash and short-term investments at the end of the third quarter.
Besides Linux, Novell's business units include identity and security management, systems and resource management, and workload-management products and its GroupWise e-mail system.
As part of the deal, Elliott will become a shareholder in Attachmate. Elliott was one of several parties in a 2006 buyout of Metrologic Instruments Inc., a maker of bar-code scanners. Elliott helped fund the 2009 acquisition of MSC.Software Corp. by private-equity firm Symphony Technology Group LLC.
The purchase price for Novell is 28 percent higher than the company's stock price before Elliott's March bid. The average premium acquirers offered for software companies in the past 12 months was 21 percent, with businesses that make software for enterprises the most popular targets, according to Bloomberg's analysis of more than 1,000 deals.
The companies said they expect to close in the first quarter. Credit Suisse and RBC Capital Markets are acting as the financial advisers for Attachmate. JPMorgan Chase & Co. advised Novell.