Novell Inc said a US$5.75-a-share acquisition offer from Elliott Associates LP was “inadequate” and undervalues the maker of Linux operating system software.
Novell’s board is reviewing its alternatives, which include a stock repurchase, joint ventures, a cash dividend, a recapitalization and a sale of the company, the company said in a statement.
Elliott Associates LP, a fund manager based in New York that owns about 8.5 percent of Novell stock, made an unsolicited US$2 billion offer in a letter made public on March 2, saying that Novell’s shares have “underperformed all relevant indices and peers.”
Novell has struggled to sustain growth during the past 10 years, sending its stock down 85 percent. The company reported its sixth straight quarterly sales decline last month, with chief financial officer Dana Russell predicting “muted” revenue in the current quarter.
Blue Harbour Group, a Greenwich, Connecticut-based investment firm that has a 4 percent stake in Novell, said in a statement on Saturday it supports the board’s decision.
Novell spokesman Ian Bruce declined to comment, as did Scott Tagliarino, a spokesman for Elliott Associates.
Besides Linux, Novell’s other business units include identity and security management, systems and resource management, and workgroup products such as NetWare and its GroupWise e-mail system.
Elliott Associates has more than US$16 billion under management.
Waltham, Massachusetts-based Novell fell US$0.08 to US$5.64 in NASDAQ trading on Friday.
The stock is up 36 percent this year.
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