There's a storm brewing over Novell
The turnaround experts at Elliott Associates want to buy all of Novell for $5.75 per share. That's a 49% premium to Novell's enterprise value as of yesterday, a 21% premium over yesterday’s close, and a generous bid any way you slice it. Elliott sees value in Novell's assets, but disagrees with the company's strategy, which means the management team would probably be eviscerated in short order.
"We believe the Company's stock has meaningfully underperformed all relevant indices and peers" because of failed acquisitions and strategy changes, Elliott wrote in its open letter to Novell's board of directors.
That indictment does ring true when you look at Novell's stock charts. I compared Novell to direct rivals such as Red Hat
But Elliott might not be Novell's white knight. The stock trades at $6.07 right now, roughly 6% above the buyout offer. That points to investors wanting more, and possibly holding out for a richer offer.
Elliott has $16 billion under management, and it should have an ample war chest available if another bidder comes forward. I could see IBM taking an active hand in the Linux market by snagging Novell, and it's certainly possible that the deal could simply fall through, if nobody else wants to pay up and Elliott can't raise its bid. But in a day and age when Oracle