Unsolicited offer for Novell spurs its board to action

In a recent cover profile of the company, I asked whether Novell’s CEO is the right man to return the company to growth. While Ron Hovsepian certainly got Novell onto stronger financial footing, its first quarter this year again saw a slight sales decline despite healthy improvements in profit.

Well on the weekend it was quietly announced that Novell has just had to reject an unsolicited offer of $5.75 a share – or about $1bn net of Novell’s cash reserves – from Elliott Associates, which already owns 8.5% of the company.

But it seems the unsolicited offer from hedge fund Elliott Associates has given Novell’s board a bit of a fright, perhaps realising that with almost $1bn cash in the bank and a market cap of under $2bn, it’s looking more and more like a bargain.

The board said Saturday that it has, “Authorized a thorough review of various alternatives to enhance stockholder value. These alternatives include, but are not limited to, a return of capital to stockholders through a stock repurchase or cash dividend, strategic partnerships and alliances, joint ventures, a recapitalization and a sale of the Company.”

Many will read that as being akin to planting a ‘For Sale’ sign outside its Massachusetts HQ.

Anyway when I asked Hovsepian recently if he believes he is the right man to return the company to growth, he said: “I get up every morning with a lot of enthusiasm about this company because of its people and its technology and the customer base. From my vantage point I believe I have a lot more that I can give, working with all three constituencies.” After the weekend’s news, it’s not so clear that the board shares his optimism.

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