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Monday, November 22, 2010

Seattle-based Attachmate buying Novell for $2.2 billion; Microsoft to get some patents

Washington State's largest privately held software firm (Attachmate) today announced that it has agreed to buy most of Novell Inc. for $2.2 billion, while a consortium led by Washington's largest publicly held software firm (Microsoft, also the world's largest), gobbles up the remainder.

Bloomberg has more:
Novell, based in Waltham, Massachusetts, rose 37 cents, or 6.6 percent, to $5.96 on the Nasdaq Stock Market at 2:34 p.m. New York time. It had gained 35 percent this year before today.

The company, which also competes against Oracle Corp. and BMC Software Inc., has said last year’s recession hurt customer orders. The company had $1.04 billion in cash and short-term investments at the end of the third quarter.

Novell makes Linux operating-system software, and its business units also include identity and security management, systems and resource management, workload management and its GroupWise e-mail system.

The consortium led by Microsoft is acquiring 882 patents, according to a regulatory filing. Microsoft declined to comment on the asset purchase, said Tricia Payer, a spokeswoman for the company. Novell Chief Executive Officer Ron Hovsepian also declined to elaborate on which patents were sold.
One quibble with this report: It's not quite accurate to say that Novell "makes Linux operating-system software". Linux is a kernel, not an operating system. Every free software distribution out there, including those maintained by Novell, includes components besides the Linux kernel.

The most important non-Linux components are usually GNU libraries, which is where the term "GNU/Linux distribution" comes from.

As TechFlash notes, this deal is another one of those instances where a smaller company is eating up a larger one:
Novell currently has 3,450 employees, while Attachmate employs 925 (including 350 in the Seattle area). A spokeswoman for Attachmate said that the company will operate four business units after the deal closes: Attachmate, NetIQ, Novell and SUSE. She added that the goal is to "do no harm" to the business units that Attachmate integrates.
Jon Talton, meanwhile, says the sale is just another example of predatory hedge funds and private equity firms forcing firms into deals that don't necessarily make sense. He cautions Microsoft — which got a piece of the action today — to remember that the capital markets are not its friends.

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