Novell spurns buyout offer

Novell board rejects Elliott Partners' $2 billion bid, saying it will explore other options.

Novell Inc.'s board did not think much of Elliott Partners $2 billion buyout offer.

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On Saturday, the board of directors rejected the offer as "inadequate" and said the company would explore other options, including stock buy-backs, cash dividends and more alliances to appease shareholders.

An email from Novell CEO Ron Hovsepian on Saturday morning informed Novell customers of the decision.

Novell remains a company in transition, seven years after buying SUSE and its Linux franchise. Some true red Novell partners say they have been able to parlay their venerable NetWare OS business into Novell's Open Enterprise Server-related sales and services. Other, more open-source oriented partners say privately that Novell mismanaged that acquisition and squandered SUSE's strength in Europe.

"They should have kept the SUSE branding and lost the rest," said one of these partners.

When Novell bought SUSE, it had a real shot to take on Red Hat Inc. Now Red Hat remains strong and Ubuntu is coming up in the world, said one New York area Novell partner.

This partner thinks a housecleaning -- sparked by a buyout -- might be the best thing for Novell. "There are still a lot of 20-year veterans there. They need to make it more of a SUSE company. I'm not sure Elliott could screw Novell up more than Novell already has."

"Novell has certainly done a good job making itself smaller," quipped one long-time Platinum partner.

Still, with some creativity, several Novell partners have managed to bring new business into the fold.

Data Technique Inc., a Pittsburg, Kan.-based Novell partner, has not only migrated NetWare customers to OES, but has integrated Novell's identity management product with some Google applications, according to CEO Terry Calloway. This ConnexCloud product lets Google's cloud-based Google Apps connect with on-premise applications.

Calloway and others said long-time Novell nemesis Microsoft has helped the company with its investment and interoperability agreements with NetWare.

The one strategic move he takes exception to was Novell's buyout in 2001 of Cambridge Technology Partners, a big systems integrator. For some years after that, Novell was led by former CTP executive Jack Messman, and in the view of many partners, never recovered.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com, or follow us on twitter.

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