Should Novell Go Private?

From the ‘Time to Sell‘ files:

Novell is now in play.

The company received what they call an “unsolicited proposal from Elliott Associates, L.P. to acquire the Company for $5.75 per share in cash,” which values the company at just under $2 billion.

In layman terms it basically means Novell is for sale and could be taken private by institutional stock holder/Hedge Fund Elliot Associates. In my personal opinion it’s likely a good deal for Novell and its shareholders.

Novell has struggled this past year (but then again who hasn’t?) and just recently re-organized their business around the idea of being an intelligent workload management vendor. It’s an interesting idea but frankly I don’t think it values all of Novell’s assets properly. The idea of a big architectural play to handle all types of workloads is a neat idea but I just don’t think that’s the practical reality in most enterprises today.

The quarterly pressure of meeting revenue targets that a public company has just doesn’t match with Novell’s strategy which is more of a medium term approach in my view. Novell’s intelligent workload management strategy will not deliver the short term quarterly gains that the public markets demand.

As a private company Novell will not be subject to the same quarterly scrutiny and will have more room to develop its strategy. Whether or not that strategy is a winner or loser remains to be seen.

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