The makers of SUSE Linux Enterprise are holding out for more

Mar 22, 2010 14:21 GMT  ·  By

Novell has announced that it has declined a takeover bid from New York-based hedge fund Elliott Associates L.P. saying that the bid "undervalued" the company. The open-source software maker says it is looking at other alternatives to "enhance stockholder value" including looking for other potential buyers. Elliott Associates offered to buy Novell a couple of weeks ago, valuating the company at $2 billion.

"Novell, Inc. today announced that its Board has concluded, after careful consideration, including a review of the proposal with its independent financial and legal advisors, that the unsolicited, conditional proposal from Elliott Associates, L.P. to acquire the Company for $5.75 per share in cash is inadequate and that it undervalues the Company's franchise and growth prospects," said the company in a press release yesterday.

Novell, which makes the SUSE Linux Enterprise and offers other services and software aimed at businesses, has been struggling to see any growth in the recent years. It still makes a significant amount of money from its legacy products, like NetWare, and has made a couple of acquisitions in the past couple of years but has failed to make any significant headway in most of the markets it operates in. Its enterprise Linux offering is pretty popular but is still behind Red Hat.

"Novell also announced that its Board of Directors 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," the press release also read.

Elliott Associates already owns 8.5 percent of the company and it has offered to pay $5.75 per share which would add up to slightly below $1 billion in cash. Novell stock was priced at $4.75 at the time, March 2nd, but has since soured and maintained at a higher level. Novell shares are currently at $5.64.