Feeds

Attachmate gobbles up Novell for $2.2bn

Regurgitates unspecified IP to Microsoft for $450m

Next gen security for virtualised datacentres

Novell has accepted a takeover bid by legacy connectivity and security software provider Attachmate for $2.2bn.

"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," explained Ron Hovsepian, president and chief executive officer at Novell, in a statement announcing the deal.

"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."

Attachmate is a conglomerate of legacy software suppliers who create tools for accessing, modernizing, and securing applications that reach back into proprietary IBM minicomputers and mainframes, now known as Power Systems running the IBM i operating system (what used to be called AS/400, iSeries, or System i platforms) or System zEnterprise. Those three companies are WRQ, Attachmate, and NetIQ.

Francisco Partners and Thoma Cressey Equity Partners (now called Thoma Bravo) paid an undisclosed amount to buy WRQ, a maker of host access and application modernization tools for AS/400s and mainframes, back in December 2004. In April 2005, Golden Gate Capital joined the team and the three equity firms ganged up to buy WRQ's main rival, Attachmate, creating a company with around $200m in revenues.

In May 2006, three equity firms ponied up $495m to buy publicly traded NetIQ, which itself was an agglomeration of companies to build out its portfolio of system management and security tools. When NetIQ was added to Attachmate, the resulting company had over 40,000 customers, 16 million users, and around $400m in annual revenues. It is unclear how much revenue the company makes these days or if it is profitable.

The company clearly needs to buy more Web capacity - its site is offline since announcing the Novell deal this morning after Wall Street opened for business.

In its announcement of the deal, Novell said that Attachmate was paying $6.10 per share to acquire Novell, which works out to around $2.2bn in cash.

Novell was crowing that this represented a 28 per cent premium over the company's share price the day before Elliott Associates made its unsolicited takeover bid on Novell for $5.75 per share on March 3. When you netted that deal out against the $991.3m in cash that Novell had on hand at the time, and take into account that Elliott Associates already had 8.5 per cent of Novell's shares, that private equity company back in March was trying to get control of Novell for around $940m.

Novell rejected the advances of Elliott Associates at the end of March, and put itself into play in May. Some two dozen suitors have been combing through Novell's books, seeing if it was worth buying, according to various rumors. Novell never commented on the talks, except to say it would make an announcement when it made a decision to accept an offer.

How generous is the Attachmate-fronted offer by Francisco Partners, Golden Gate Capital, and Thoma Bravo? By the numbers it is not much more, and because of the intellectual property asset sale, Attachmate is getting control of Novell for a lot less money.

Let's do the math. Novell had $605.5m in cash and equivalents and $437.9m in short-term investments in the quarter ended July 31. That's just a tad over $1bn, meaning that Attachmate is paying $1.16bn to get ahold of Novell.

But then under the two-way deal, Attachmate is then going to get $450m to sell some unspecified intellectual property to a consortium called CPTN Holdings LLC, which was organized by Microsoft. So Attachmate is paying only $706.6m to get Novell.

If Elliott Associates had made a phone call to Microsoft back in February, it could have paid as much as $2.45bn for Novell and did the same two-step and closed the deal.

The three private equity companies that control Attachmate run their combined businesses as Attachmate (for host access and application modernization) and NetIQ (for systems management and security). In the statement, Jeff Hawn, Attachmate's CEO and chairman, said that it would operate Novell as two business units: one for the SUSE Linux stack and another for all of the other Novell bits. Over time, it stands to reason that NetIQ and portions of Novell dealing with access control and workload management will be merged.

Novell shareholders have to wait to see exactly what Attachmate is selling off to Microsoft and then ponder the deal. Wouldn't it be funny if Microsoft ended up owning whatever rights to Unix that Novell thinks it has? ®

The essential guide to IT transformation

More from The Register

next story
Munich considers dumping Linux for ... GULP ... Windows!
Give a penguinista a hug, the Outlook's not good for open source's poster child
The Return of BSOD: Does ANYONE trust Microsoft patches?
Sysadmins, you're either fighting fires or seen as incompetents now
Intel's Raspberry Pi rival Galileo can now run Windows
Behold the Internet of Things. Wintel Things
Microsoft cries UNINSTALL in the wake of Blue Screens of Death™
Cache crash causes contained choloric calamity
Eat up Martha! Microsoft slings handwriting recog into OneNote on Android
Freehand input on non-Windows kit for the first time
Time to move away from Windows 7 ... whoa, whoa, who said anything about Windows 8?
Start migrating now to avoid another XPocalypse – Gartner
You'll find Yoda at the back of every IT conference
The piss always taking is he. Bastard the.
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.