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By | Timothy Prickett Morgan 12th March 2010 15:00

Hedge fund suitor denies Novell asset sale rumors

Elliott wants it all - especially the cash

As the week was ending, rumors were swirling that the hedge fund suitor of Novell, Elliott Associates, which last week offered $1bn net of cash to take over the perennially struggling software maker, was going to start selling off its target's assets if it clinches a deal.

This may mean the NetWare operating system biz, and maybe even the SUSE Linux biz, should it prevail in its desires. Elliott put out a statement this morning denying the rumors.

Elliott has dabbled (sometimes unsuccessfully) in takeovers in the tech field but clearly wants to do a big deal. Last Tuesday after the market closed the company said it has been buying up Novell shares since January and had an 8.5 per cent stake in the company and wanted the rest of it, including the $991.3m in cash Novell is sitting on. Elliott offered $5.75 a share for Novell, which closed that day at $4.75 a pop, and when you take out the value of the Novell cash pile and the stake Elliott already has, the hedge fund is trying to get Novell for around $940m.

Thus far, all that Novell's top brass have said about the offer is that they are mulling it over, perhaps awaiting a bidding war with IBM, Oracle, Citrix Systems, SAP or Hewlett-Packard to come in and offer more. The best fit might be SAP, oddly enough, which will need a stack of systems software to compete with Oracle.

Bloomberg reported yesterday that, according to sources familiar with Elliott's plans, the hedge fund would try to repatriate $400m of that cash hoard that is held overseas and that it might try to find a buyer for Novell's "open source operating system". Bloomberg went on to say that Novell's board of directors would meet next week to talk over the proposed takeover. Other rumors have since popped up that Elliott might sell off the NetWare operating system business, which is most definitely not open source.

In response to the Bloomberg story, Elliott put out a statement two hours after the market closed denying the rumors. "The story that Bloomberg ran today was inaccurate. Elliott has made no statement with respect to its intent regarding Novell. Elliott wants to own the company. Elliott has no plans to sell any business units and to report anything else would be erroneous."

As El Reg goes to press, Novell's shares are trading at $5.85, after setting a year-high of $6.15 on March 3. It will be interesting to see if anyone else wants Novell, and if they might be willing to pay a higher premium for it. ®

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