Elliott may sell Novell's software unit business if offer succeeds

New York: Elliott Associates LP, the fund manager that made an unsolicited $2 billion (Dh7.34 billion) offer for Novell, would sell the NetWare networking-software unit if its bid succeeds, a person familiar with the matter said.

Elliott, which owns about 8.5 per cent of Novell stock, would also try to run the company more efficiently and bring about $400 million in cash that Novell holds offshore to the US, said the person, who asked not to be identified because details of Elliott's offer haven't been made public.

Operating system

Elliott may also try to find a buyer for Novell's business that specialises in an open-source operating system, the person said.

Novell stock has surged 22 per cent since March 2, when Elliott disclosed the $5.75-a-share offer. Under Chief Executive Officer Ron Hovsepian, Novell is trying to reverse six straight quarters of sales declines. The Waltham, Massachusetts-based company has said it will consider Elliott's offer.

"The very fact that a fin-ancial party is willing to step up shows that there are ways this business could be run better," said Eric Gebaide, a managing director at New York- based investment bank Innovation Advisors, which isn't part of the proposed deal.

Novell's board is scheduled to meet early this week to consider Elliott's offer, said the person familiar with the offer.

Ian Bruce, a Novell spokesman, declined to comment until the company releases a further public statement on the bid. Scott Tagliarino, a spokesman for New York-based Elliott, declined to comment beyond the firm's offer letter to Novell's board.

In its letter made public March 2, Elliott said Novell's shares have "underperformed all relevant indices and peers".

The company is overspending on employees, said the person familiar with the bid.

If the takeover attempt is successful, Elliott would take steps to improve sales per employee, the person said.

Revenue

Novell's 3,600 employees generated about $239,496 each in revenue for the fiscal year ended October 31, according to regulatory filings.

Sales per employee was little changed from the previous year.

Novell's per-employee sales are on par with those of competitor Red Hat and below the $628,355 per employee for Microsoft and the about $353,000 for Symantec.

Novell rose 2 cents to $5.83 in Nasdaq Stock Market trading on Thursday. The shares, up 40 per cent this year, are trading above Elliott's bid price.