Novell Soars on Takeover Offer

Add Novell (NASDAQ: NOVL) shareholders to the list of those who have figured out how to earn money from open source technologies.

Novell shares soared 28 percent in after-hours trading today after institutional stockholder Elliott Associates offered to purchase the entire company for $5.75 a share in cash, or $1 billion.

A letter to Novell’s board from portfolio manager Jesse Cohn said that over the last several years, Novell “has attempted to diversify away from its legacy division with a series of acquisitions and changes in strategic focus that have largely been unsuccessful. As a result, we believe the Company’s stock has meaningfully underperformed all relevant indices and peers. … we believe that Elliott is uniquely situated to deliver maximum value to the Company’s stockholders on an expedited basis.”

Shares of the Linux vendor closed the day at $4.75 and traded above $6 in the after market, suggesting that some traders think that Elliott’s offer won’t be the last.

The acquisition offer comes just a week after Novell said its Linux business is finally nearing profitability.

Competitor Red Hat (NYSE: RHT), meanwhile, has turned its Linux success into membership in the S&P 500 and a $5 billion stock market valuation.

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