Elliott wants to take Novell private

JUST BEFORE the trial opens in the SCO v. Novell lawsuit, investment fund Elliott Associates has offered to buy Novell for $2 billion.

The move put the price of Novell shares up by about 20 per cent to over $6 yesterday, apparently because investors think that Elliott will have to stump up more cash for the buyout.

According to Reuters, several large software makers might consider making a rival bid because they could sell their business programs alongside Novell's version of Linux.

One potential buyer might even be Microsoft, although that could attract the scrutiny of antitrust regulators.

But the timing of the offer is a little unusual. Novell is about to go to trial to defend itself against SCO's lawsuit claiming that it either owns or should be given the copyrights to Unix.

While Novell seems fairly likely to win, SCO seems to have a sympathetic federal judge on its side and will certainly try to sway the jury. Since the issue is over whether Novell actually owns the Unix copyrights then it could get messy.

For Elliott to benefit from its offer to buy Novell, it might be gambling either that the share price might increase dramatically after the trial is over and the inevitable appeals are decided, or that the shares might take a real battering during the judicial process, making the company relatively cheap to acquire, or both, in which case it might stand to make a lot of money.

Elliott has eight per cent of the company already so buying the whole lot could be seen as protecting its investment.

We're not sure what's going on here. It might even be the case that a certain company in the Northwest US is behind this, possibly because there could be information that was produced during pretrial discovery that it might want to suppress.

But it seems Novell is in play to be acquired now and there are certain to be further developments. Stay tuned. µ