Attachmate Acquires Novell

Attachmate Corporation, a privately-held provider of IT service management, security and compliance management software, is purchasing Novell, Inc. in a cash transaction valued at approximately $2.2 billion.

Novell is also selling certain intellectual property assets to CPTN Holdings LLC, a consortium of technology companies organized by Microsoft, for $450 million in cash, with cash payment reflected in the merger consideration to be paid by Attachmate.

In a press release, Novell says its board concluded the merger and sale were the best way to enhance stockholder value and also build upon Novell’s brand and market value. Attachmate plans to operate Novell as two business units – Novell and SUSE – and will join them with its other holdings, Attachmate and NetIQ.

This transaction comes as something of a surprise. Novell has been active with new product development this year, releasing cloud-based solutions for functions including identity management, application workload management and security management. Novell previewed a new integrated console and identity-tracking feature of a planned upgrade to its ZENworks systems management framework less than two weeks ago.

Novell did reject a $2 billion takeover offer from a shareholder in March 2010 and has reported eight straight quarters of revenue declines, so a sale is not totally out of the blue. However, it is interesting that Attachmate, rather than an acquisition-hungry competitor such as Oracle, executed the transaction.

Attachmate has been in business 30 years, says it has 65,000 customers, and offers solutions in areas including terminal emulation, enterprise fraud management, managed file transfer and legacy modernization. This purchase considerably raises Attachmate’s profile in the marketplace and opens the company to Novell’s substantial user base. Attachmate also instantly becomes a leading player in the workload management space.

Attachmate Corporation's acquisition of Novell is subject to customary closing conditions, regulatory approvals and clearance, and is also conditioned upon the closing of the proposed asset sale to CPTN Holdings LLC.  In addition, the transaction is subject to approval by Novell's stockholders. Novell currently expects these transactions to close in Q1 2011.