Attachmate gobbles up Novell for $2.2bn
Regurgitates unspecified IP to Microsoft for $450m
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? ®
Just what will CPTN Holdings get?
CPTN Holdings LLC, which was organized by Microsoft appears to be getting some intellectual property rights as part of this deal.
What might Novell have that would interest Microsoft?
Hmmmmmm. Maybe the copyright to the UNIX code that they did not get by backing SCO (I know it's conjecture, but Microsoft were an investor in Baystar when Baystar offered capital to SCO. Look it up, if you don't know). And, of course, they may take ownership of SuSE.
This could be verrrrrry bad news for the Open Source movement, if it means MS get a dagger to dangle over the head of small open source companies, in the same way that SCO tried.
Sounds like another round of FUD coming.
With SUN out of the way, it would leave IBM and Redhat to try to defend the shattered remnants of the UNIX legacy. I'm seriously worried.
It really isn't a problem.
> This could be verrrrrry bad news for the Open Source movement,
Not at all.
Suppose Microsoft *do* get Unix. What would that matter to FLOSS people?
To re-run the SCO shake-down, you need to prove two things :-
- that there is AT&T-copyrighted Unix code in Linux
- that it was put there improperly
Despite years of shouting its FUD from the rooftops, SCO singularly failed to prove the former - they found a load of BSD-copyrighted stuff, but a quick glance at the BSD licence shows that that is perfectly acceptable.
The latter is an even higher hurdle; if Novell owned the copyrights (as two judges and a jury have declared they do), then if any such code is eventually found, it is now perfectly permissible, because the copyright owner has deliberately released it under the GPL. Any new owner may not revoke that licence.
And remember - *both* of the above need to be proven for a SCOSource Mk. 2. Some infringing material would need to be found, and it would have to be put into Linux without the copyright owner's consent. If either of these fail, the whole scam fails.
The only way this could be a problem is if the new owners of Novell declare that Novell perjured itself in the SCO vs. Novell trial, and it was actually SCO that owned the copyrights all along. Besides the array of lawsuits such behaviour would bring into existence, it would also likely mean real jail time for a number of individuals, and disbarment for certain lawyers. I can't see that happening, myself.
A 100lb gorrilla...
is not a particularly intimidating animal.