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Novell Agrees to be Acquired by AttachMate; Sells Some IP to a MS-Organized Consortium - Updated
Monday, November 22 2010 @ 01:33 PM EST

Novell has sold itself to Attachmate Corporation. There is a side deal selling "certain intellectual property assets" to CPTN Holdings LLC, "a consortium of technology companies organized by Microsoft". SUSE goes to Attachmate, I gather, and will be a separate unit, so what goes to Microsoft's consortium?

No doubt we'll find out in time. It is being reported that what it will get is 882 patents. Blech. How many does Novell own? Is that all of them? If so, will we get to watch Son of SCO, but with patents this time? But keep in mind that the WordPerfect litigation could be in this picture, and I wonder if this could be a kind of deal to tactfully settle it out, with Microsoft paying to end it this way? $450 million isn't a lot, though, so how could it be all of the patents? Nevertheless, selling any patents to Microsoft is like selling your baby to a pedophile in the limited sense that you can reasonably predict what it will do with the acquisition.

Novell's CEO is telling "valued customers" in an email that it's a merger agreement, that Novell believes "the transaction is great news for our customers," that all contracts will be honored, and that the IP sale to Linux's sworn enemy "will not impact customers", whatever that means. Not a word about Linux and what it means for SUSE. Not a word to reassure the community. ComputerWorld's Chris Kanaracus has the interesting detail that Elliott Management, the group Novell rejected earlier, will become a shareholder in Attachmate:

Attachmate's offer of $6.10 per share follows the $5.75 a share offer made in March by investment firm Elliott Management Corporation, one of Novell's largest shareholders. Novell rejected that offer. But as part of the deal announced Monday, Elliott is to become an equity shareholder in Attachmate, according to a statement.
So. The vultures won, I gather. Here is the Attachmate statement, so you can decide for yourself. But here's a word from Elliott in that statement:
“Elliott is pleased to have been a major catalyst in this transaction, enabling Novell’s shareholders to realize substantial shareholder value,” said Jesse A. Cohn, portfolio manager at Elliott Management. “Novell has a robust product set that we believe will create a significant value opportunity as part of the Attachmate Corporation portfolio of products.”
A major catalyst. Significant value opportunity. Get the picture?

Here's what Ron Hovsepian is telling Novell's "valued customers" by email:
Dear Valued Novell Customer,

I am writing to let you know that today we announced that Novell has entered into a definitive merger agreement under which Attachmate Corporation would acquire Novell for $6.10 per share in cash in a transaction valued at approximately $2.2 billion.

We believe this transaction is great news for our customers. Novell has a long history of innovation and market leadership, and this tradition will be preserved and built upon through this transaction. We place tremendous value on the relationships we’ve cultivated with our customers and I can assure you that providing you with the innovative products, solutions and support you’ve come to rely on remains a top priority.

We can also assure you that the planned transaction with Attachmate Corporation does not alter our obligations to honor all contractual commitments. This includes maintenance and technical support for our products. We continue to execute aggressively on our product development efforts and are committed to providing exceptional service and being easy to do business with.

Novell also announced the sale of certain intellectual property assets to CPTN Holdings LLC. The sale of certain intellectual property assets will not impact customers. Customers will continue to be authorized to use Novell products under this intellectual property.

Attachmate Corporation plans to retain both the Novell and SUSE brands and operate them as two separate business units, along with its other holdings, Attachmate and NetIQ. The transaction with Attachmate Corporation and the sale of certain intellectual property assets to CPTN Holdings LLC are currently expected to close in the first quarter of 2011.

Until the merger transaction closes, it is business as usual. We have no plans to change your current sales coverage or ordering practices. If you have any questions or wish to discuss this matter further, please feel free to contact your local sales leadership.

I want to thank you personally for your ongoing business and express my deep appreciation for the trust and confidence you have placed in Novell over the last year. We hope you share our enthusiasm about Novell’s exciting future.

Sincerely,

Ron Hovsepian

Forward-Looking STATEMENTS

This communication contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations and beliefs of Novell and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Many of these risks are beyond our control or ability to predict. Important factors that could cause actual results to differ from those set forth in the forward-looking statements include, but are not limited to, the risk that the proposed sale of certain intellectual property assets and the proposed merger may not be consummated in a timely manner, if at all; the risk that various closing conditions will not be satisfied or waived, including the risk that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transactions; and other risks and uncertainties discussed in Novell’s filings with the Securities and Exchange Commission. You should not rely upon forward-looking statements as predictions of future events. Novell expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein.

ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT

In connection with the proposed merger, Novell intends to file relevant materials with the SEC, including a proxy statement. Investors and security holders of Novell are urged to read these documents (if and when they become available) and any other relevant documents filed with the SEC because they will contain important information about Novell, the proposed sale of certain intellectual property assets, the proposed merger and the parties to these proposed transactions. Investors and security holders may obtain these documents free of charge at the SEC’s website at http://www.sec.gov. In addition, the documents filed with the SEC by Novell may be obtained free of charge by directing such request to: Novell Investor Relations at 1-800-317-3195 or from the investor relations website portion of Novell's website.

Novell and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Novell’s stockholders in respect of the proposed merger. Information regarding Novell’s directors and executive officers is contained in Novell’s Annual Report on Form 10-K for the fiscal year ended October 31, 2009, its proxy statement for its 2010 Annual Meeting of Stockholders, dated February 26, 2010, and subsequent filings which Novell has made with the SEC. Stockholders may obtain additional information about the directors and executive officers of Novell and their respective interests with respect to the proposed merger by reading the definitive proxy statement and other relevant documents regarding the proposed merger, when filed with the SEC.

Well, I told you in 2006 that Novell had sold out, did I not? The Microsoft patent deal was a big hint. The sale to the Microsoft consortium could be about that too, actually.

I hope you will be careful never to sign over your copyrights to any commercial vendor where the wording allows the vendor to change the license any way it pleases. Sometimes what pleases it most is to get a huge basket of money.

The full press release:

Novell, Inc. (NASDAQ: NOVL), the leader in intelligent workload management, today announced that it has entered into a definitive merger agreement under which Attachmate Corporation would acquire Novell for $6.10 per share in cash in a transaction valued at approximately $2.2 billion. Attachmate Corporation is owned by an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo. Novell also announced it has entered into a definitive agreement for the concurrent sale of certain intellectual property assets to CPTN Holdings LLC, a consortium of technology companies organized by Microsoft Corporation, for $450 million in cash, which cash payment is reflected in the merger consideration to be paid by Attachmate Corporation.

The $6.10 per share consideration represents a premium of 28% to Novell's closing share price on March 2, 2010, the last trading day prior to the public disclosure of Elliott Associates, L.P.'s proposal to acquire all of the outstanding shares of Novell for $5.75 per share and a 9% premium to Novell's closing stock price on November 19, 2010.

"After a thorough review of a broad range of alternatives to enhance stockholder value, our Board of Directors concluded that the best available alternative was the combination of a merger with Attachmate Corporation and a sale of certain intellectual property assets to the consortium," said Ron Hovsepian, president and CEO of Novell. "We are pleased that these transactions appropriately recognize the value of Novell's relationships, technology and solutions, while providing our stockholders with an attractive cash premium for their investment."

Mr. Hovsepian continued, "We also believe the transaction with Attachmate Corporation will deliver important benefits to Novell's customers, partners and employees by providing opportunities for building on Novell's brands, innovation and market leadership."

"We are very excited about this transaction as it greatly complements our existing portfolio," said Jeff Hawn, chairman and CEO of Attachmate Corporation. "Novell has an established record of innovation, impressive technology and brand assets, and a leading ecosystem of partnerships and talented employees. The addition of Novell to our Attachmate and NetIQ businesses will enhance the spectrum of solutions we can offer to customers. We fully support Novell's commitment to its customers and we look forward to continuing to invest for the benefit of Novell's customers and partners."

Attachmate Corporation plans to operate Novell as two business units: Novell and SUSE; and will join them with its other holdings, Attachmate and NetIQ.

Attachmate Corporation's acquisition of Novell is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act, and is also conditioned upon the closing of the proposed sale of certain intellectual property assets to CPTN Holdings LLC. In addition, the transaction is subject to approval by Novell's stockholders. The sale of the intellectual property assets to the consortium is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott-Rodino Act, and is also conditioned upon the closing of the merger with Attachmate Corporation. Novell currently expects these transactions to close in the first quarter of 2011. J.P. Morgan is serving as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Novell. Credit Suisse and RBC Capital Markets are serving as financial advisors and Jones Day is acting as legal advisor to Attachmate Corporation.

About Attachmate Corporation

Attachmate Corporation, owned by an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo, enables IT organizations to extend mission critical services and assures they are managed, secure and compliant. Principal holdings include Attachmate (www.attachmate.com) and NetIQ (www.netiq.com).

About Novell

Novell, Inc. (Nasdaq: NOVL), a leader in Intelligent Workload Management, helps organizations securely deliver and manage computing services across physical, virtual and cloud computing environments. We help customers reduce the cost, complexity, and risk associated with their IT systems through our solutions for identity and security, systems management, collaboration and Linux based operating platforms. With our infrastructure software and ecosystem of partnerships, Novell integrates mixed IT environments, allowing people and technology to work as one. For more information, visit www.novell.com.

Some media reaction:
  • The Register: Attachmate is a conglomerate of legacy software suppliers who create tools for accessing, modernizing, and securing applications that reach back into proprietary IBM minicomputers and mainframes, now known as Power Systems running the IBM i operating system (what used to be called AS/400, iSeries, or System i platforms) or System zEnterprise. Those three companies are WRQ, Attachmate, and NetIQ....The three private equity companies that control Attachmate run their combined businesses as Attachmate (for host access and application modernization) and NetIQ (for systems management and security). In the statement, Jeff Hawn, Attachmate's CEO and chairman, said that it would operate Novell as two business units: one for the SUSE Linux stack and another for all of the other Novell bits. Over time, it stands to reason that NetIQ and portions of Novell dealing with access control and workload management will be merged.

    Novell shareholders have to wait to see exactly what Attachmate is selling off to Microsoft and then ponder the deal. Wouldn't it be funny if Microsoft ended up owning whatever rights to Unix that Novell thinks it has?

  • ZDNet: What is CPTN Holdings LCC and what kind of patents did it acquire? Mary Jo Foley has highlighted the Microsoft connection in the Novell sale to Attachmate. CPTN is a Microsoft-backed consortium. Here’s what we know: Attachmate will sell 882 patents for $450 million in cash to CPTN. Here’s what we don’t know: Any history about CPTN. There are no court documents—odd for an intellectual property consortium—and SEC filings turn up dry before today. It almost looks as CPTN was created just a few days ago. Also unknown: Other companies in this consortium.

  • WSJ:Attachmate Chief Executive Jeff Hawn said in an interview that the firm plans to run Novell as a private company, at least in the near term.

    "The rationale for the deal is it lets us do a lot more for our customers," Hawn said. He said Novell, Attachmate and NetIQ--which Attachmate took private in 2006--share many customers, and the companies' identity and security businesses are complementary. In addition, Attachmate plans to further strengthen Novell's Linux business, Hawn said.

    Novell President and Chief Executive Ron Hovsepian said in an interview that it hasn't yet been determined if current Novell management will stay with the company, but management will work on the transition at least through the deal closing.

  • BusinessWeek: Private-equity firms pool money from investors to take over companies, financing the purchases mostly with debt, with the intention of selling them later for a profit.

  • Steven J. Vaughan-Nichols, ComputerWorld: While none of the parties to this deal have talked to me, sources close to the buyout tell me Attachmate and Microsoft partnered up to make the acquisition sweet enough for Novell's board. ...

    At this time, we don't know exactly what Microsoft has bought. We do know that Microsoft's goal of making sure Novell didn't end up in VMware's hands has been achieved. It's also likely that Novell's long-running WordPerfect lawsuit against Microsoft is now dead. And Microsoft may have gained intellectual property rights that it believes could be used against Linux vendors that don't partner with Microsoft.

  • Stephen Shankland, CNET: According to a regulatory filing, CPTN will get 882 Novell patents: "Also on November 21, 2010, Novell entered into a Patent Purchase Agreement...with CPTN Holdings LLC, a Delaware limited liability company and consortium of technology companies organized by Microsoft Corporation. The Patent Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Patent Purchase Agreement, Novell will sell to CPTN all of Novell's right, title and interest in 882 patents...for $450 million in cash."...

    There are many possible Novell IP assets Microsoft might be interested in--Unix copyrights that figured centrally in Novell's Linux-related fight against the SCO Group, for example.

    Microsoft isn't saying.

    "We are pleased to be a part of the acquisition of certain intellectual property assets of Novell. Microsoft looks forward to continuing our collaboration with Novell into the future, to bring mixed-source IT solutions to customers," said Horacio Gutierrez, Microsoft's corporate vice president and deputy general counsel of intellectual property and licensing, in a statement. The company declined to comment further.

    If that statement is a hint, that could indicate the intellectual property could be involved in the 2006 partnership between Novell and Microsoft. Under that partnership, Novell agreed among other things to adapt Suse Linux to run well on Microsoft's Hyper-V virtualization software, which lets multiple operating systems run on the same server simultaneously. Microsoft and Novell delivered the software in 2008 that would let SLES run well virtualized on Microsoft's technology.

  • TechFlash: Novell says in its news release that the $450 million cash payment from the Microsoft group is "reflected in the merger consideration" paid by Attachmate, suggesting that Microsoft's role was key to the broader deal....

    Novell currently has 3,450 employees, while Attachmate employs 925 (including 350 in the Seattle area). A spokeswoman for Attachmate said that the company will operate four business units after the deal closes: Attachmate, NetIQ, Novell and SUSE. She added that the goal is to "do no harm" to the business units that Attachmate integrates.

  • Barron's: I was joined this afternoon by the CEOs of Attachmate and Novell (NOVL) to discuss the acquisition of Novell by Attachmate for $2.2 billion, announced this morning.

    On whether this was the best deal to do, Ron Hovsepian, Novell’s president and CEO, said, “I think the board made their decision as to what would create the best shareholder value at this time. They reviewed all the alternatives, and in their opinion, this is what they concluded was the best value for shareholders.”...

    Hovsepian says that SUSE has 80% share of IBM (IBM) mainframe computers based on the “Z” chip that use Linux, as one example of overlap between the companies’ markets.

Does this mean IBM is in the background trying to make sure things are not too bad? I have no idea. But separating out SUSE means it could later get sold off to someone else. Sad when that seems like the best possible thing to hope for.

But I expect that the recent attempts to ramp up the usual anti-Groklaw smear campaign by those who seems to have an attachment to Microsoft could be related to this news. I was wondering why.

From Novell's 8K:

Patent Purchase Agreement

Also on November 21, 2010, Novell entered into a Patent Purchase Agreement (the “Patent Purchase Agreement”) with CPTN Holdings LLC, a Delaware limited liability company and consortium of technology companies organized by Microsoft Corporation (“CPTN”). The Patent Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Patent Purchase Agreement, Novell will sell to CPTN all of Novell’s right, title and interest in 882 patents (the “Assigned Patents”) for $450 million in cash (the “Patent Sale”).

The Patent Purchase Agreement contains representations and warranties of the parties, including with respect to Novell’s title to the Assigned Patents, existing licenses and rights with respect to the Assigned Patents, restrictions on rights to the Assigned Patents, the validity and enforceability of the Assigned Patents and the equity commitments of the members of CPTN to fund CPTN in an aggregate amount equal to or exceeding $450 million.

The Patent Purchase Agreement will, by its terms, automatically terminate upon the termination of the Merger Agreement, except that, if Novell receives an acquisition proposal that contemplates an acquisition of Novell other than by an acquirer whose acquisition proposal contemplates that Novell will retain all of the Assigned Patents, Novell deems such a proposal to be a superior proposal to the Merger, and CPTN elects to continue the Patent Purchase Agreement, the Patent Purchase Agreement will remain in full force and effect. Under such circumstances, references in the Patent Purchase Agreement to the Merger Agreement will automatically be deemed to be to the acquisition agreement between Novell and the party from which Novell has accepted the superior proposal (the “Alternate Merger Agreement”). In addition, CPTN may also elect to continue the Patent Purchase Agreement in the event that the Merger Agreement is terminated for any other reason than Novell’s receipt of an acquisition proposal for the entire company that it deems to be a superior proposal to the Merger, in which case the Patent Purchase Agreement will remain in full force and effect and references in the Patent Purchase Agreement to the Merger Agreement shall automatically be deemed to be of no force or effect.

Each of Novell and CPTN has separate rights to terminate the Patent Purchase Agreement without the agreement of the other party if (i) the closing of the Patent Sale has not occurred or it will not be possible for the closing of the Patent Sale to occur on or prior to April 20, 2011 (or if extended, the outside termination date specified in the Merger Agreement or an Alternate Merger Agreement, if applicable), provided that this termination right will not be available to a party if its breach of the Patent Purchase Agreement has been the cause of or resulted in the failure to consummate the Patent Sale; or (ii) the closing of the Merger does not occur immediately after the closing of the Patent Sale (unless CPTN has waived such termination right), provided that this termination right will not be available to a party if its actions have been the cause of or resulted in the failure to consummate the Merger. In the event that CPTN has elected to continue the Patent Purchase Agreement following a termination of the Merger Agreement as described above, Novell and CPTN will enter into a royalty-free, fully paid-up patent cross license for no additional consideration, effective as of the closing, with respect to all patents and patent applications owned or controlled by them on mutually acceptable terms that are no less favorable in the aggregate to either party than the terms of any other patent cross license offered by CPTN to any other person (other than any member of CPTN or an affiliate of any such member).

Consummation of the Patent Sale is subject to certain conditions to closing, including, among others, (i) the expiration or termination of the waiting period applicable to the consummation of the Patent Sale under the HSR Act and certain other antitrust laws; (ii) all required governmental approvals under applicable law shall have been obtained; (iii) the absence of any law, order or other action enjoining or otherwise prohibiting consummation of the Patent Sale; (iv) the absence of any threatened or pending action by any governmental entity challenging or seeking to prevent, alter or materially delay the Patent Sale, seeking to restrain or interfere with the operation of CPTN or the Assigned Patents or seeking to require CPTN or any of its members or affiliates to divest any assets (including any Assigned Patents) or businesses or to agree to restrictions or limitations on its assets (including any Assigned Patents) or businesses; (v) the absence of any threatened or pending action with respect to CPTN by any person (other than a party to the Merger Agreement or its affiliate) that CPTN reasonably believes is reasonably likely to prevail in preventing, enjoining or materially altering or delaying the closing of the Patent Sale beyond a reasonable period of time under the circumstances and that, if successful, would reasonably be expected to adversely affect the benefits of the Patent Sale to CPTN in any material respect; (vi) the satisfaction or waiver of each of the conditions to the consummation of the Merger or alternate merger (other than the closing of the Patent Sale), and the parties to the Merger Agreement or the Alternate Merger Agreement, as the case may be, shall be ready, willing and able to consummate the Merger or alternate merger, as the case may be, immediately after the closing of the Patent Sale; (vii) the accuracy of the parties’ respective representations and warranties; and (viii) the parties’ respective compliance with agreements and covenants contained in the Patent Purchase Agreement.

Information Regarding Certain Relationships

Novell and Microsoft are parties to a Business Collaboration Agreement, a Technical Collaboration Agreement and a Patent Cooperation Agreement that collectively were designed to build, market and support a series of new solutions to enhance the interoperability of Novell’s products with Microsoft’s products.

That does make it sound like the patent sale is related to the joint work Novell has been doing with Microsoft. That patent deal expires in 2011, after all.

But I note that Miguel de Icaza tweets that Mono goes to Attachmate. Watch out, y'all. We warned you and warned you about Mono, did we not? Did you listen? I hope you will now. If you go to Google Patents and search for Miguel de Icaza, you'll find two patents.

The legalese in the 8K about various other buyers doesn't mean anything except that it's language saying that if the Attachmate deal doesn't go through, it would impact the patent sale. Then the consortium can back out or decide to go with the new buyer. That's just protective language. But it also indicates to me that the consortium sees some relationship between the value of the patent sale and the merger with Attachmate. And that is worrisome. I mean, are we looking at a kind of cloaked Microsoft buy by proxy of SUSE and with it Mono? Any antitrust possibilities, if so? Since Attachmate is a privately owned company, I guess that means Novell is going private, at least for now, I guess you could say.

When I go to the USPTO website and search the PAIR database for Novell as assignee and UNIX in all fields, I come up with 102 patents. If you just search for Novell as assignee, you only get 461. If I search for SUSE, I get zero. Of course, that's just the US. Novell has patents registered in other countries as well. If you want to search through that, just go here to the UK's Esp@cenet and you can search worldwide or by area. Here's one Novell registered in Europe, for example. "Processing HTML extensions to enable support of information cards by relying party." Speaking of stupid software patents. So it is not beyond conceivability that Novell has sold its entire patent portfolio. But let's wait until we know a bit more. What we know for sure is bad enough for one day.

And may I say thank you to Richard Stallman for inventing the GPL? Novell has released Linux under that license for some time, and so it provides Linux the only patent protection that Novell couldn't sell. And to the Linux kernel guys, time to rethink an upgrade on that license to GPLv3? You think?

And OIN? Linux Foundation? Who's who now? What happens to the memberships? The patents promises? I see Matt Osoff of Business Insider on the San Francisco Chronicle is saying Microsoft wants patents to use to force more cross-licensing deals:

The deal helps Microsoft in its decade-long fight against open-source operating system Linux in two ways.

First, it keeps a Microsoft competitor from buying Novell's SUSE Linux implementation. VMWare was looking at buying SUSE so it could sell a top-to-bottom software stack that would compete directly against Microsoft's Windows Server and its built-in virtualization technology. This was a major fear in Microsoft's server group, according to my sources there.

Second, although the companies didn't say exactly what patents were included, it seems likely that some of them are related to SUSE Linux. If so, these patents will give Microsoft further ammunition to sign cross-licensing deals with companies that sell other products based on Linux. And those licensing deals will continue to raise questions in the mind of potential Linux customers.

If that's so, Microsoft is a lot like SCO, a dying company hoping that Linux will pay it tolls for "IP" and thus help it to survive. What? You say it can't make much that way? Then that leaves another more obvious thought, that it wants to kill Linux with patents. Maybe both. But here's what I think we can rely on, judging from the past: Microsoft likes to scare people with patents. I'm not overly concerned, frankly. They are what they are and they do what they do.

Update: There's already a shareholder lawsuit:

Kendall Law Group, led by former federal judge Joe Kendall, is investigating Novell, Inc. (NASDAQ: NOVL) for shareholders in connection with the proposed acquisition by Attachmate Corporation. The national securities firm’s investigation seeks to determine whether Novell and its Board breached their fiduciary duties by entering into the agreement without properly shopping for a deal that would provide better value for shareholders. If you are a Novell shareholder and would like additional information about your rights, contact the Kendall Law Group at 877-744-3728 or by email at skendall@kendalllawgroup.com.

Update 2: And now there is another:

Law office of Brodsky & Smith, LLC announces that it is investigating potential claims against the Board of Directors Novell, Inc. (“Novell”) or the “Company”) (Nasdaq:NOVL - News) relating to the proposed acquisition by Attachmate Corporation (“Attachmate”).

Under the terms of the transaction, Novell shareholders would receive cash of $6.10 for each share of Novell stock they own. The investigation concerns possible breaches of fiduciary duty and other violations of state law. The transaction appears to be unfair, in part, given that Novell traded at $6.51 a share as recently as September 22, 2010 and an analyst set a price target for Novell at $7.50 per share. In addition, in March of this year, Novell rejected a $2 billion takeover offer from shareholder Elliott Associates LP as inadequate. Thus, shareholders need additional information to know if Attachmate is underpaying for the company.

If you own shares of Novell and wish to discuss the legal ramifications of the proposed transaction, or have any questions, you may e-mail or call the law office of Brodsky & Smith, LLC who will, without obligation or cost to you, attempt to answer your questions. You may contact Jason L. Brodsky, Esquire or Evan J. Smith, Esquire at Brodsky & Smith, LLC, Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by e-mail at investorrelations@brodsky-smith.com, visiting http://brodsky-smith.com/246-novl-novell-inc.html, or by calling toll free 877-LEGAL-90.

I have a question, actually, although I'm not a shareholder. What exactly did Attachmate pay? TechFlash, above in the media section, wrote: "Novell says in its news release that the $450 million cash payment from the Microsoft group is "reflected in the merger consideration" paid by Attachmate..." so how does that figure in, and what is the connection between the two deals or the two entities for that matter?

Update: After some reflection and reading what others have written and discussing this with a lawyer who handles this type of transaction, although not this one, I gather that what Novell is actually paying is less than it looks. I mean, they don't have to pay Elliott for its shares, I guess, since Elliott says it gets an investment share of AttachMate. The $450 million is subtracted from the total also, in that it seems to go to the buyer, not to Novell. That's odd. And surely Novell is retaining a license to use its patents in its ongoing business if it needs any of them to do that. [Also, now that I think of it, Novell reportedly has about a billion in the bank, no? So Attachmate gets that in the deal, so in effect Attachmate is buying Novell with Novell's own money up to that amount.]

So I think that explains why there are two incipient shareholder suits claiming Novell sold for too little. Whether they did or not isn't for me to even guess at. It's not my area of expertise. Even if it were, there aren't enough facts yet publicly known. I'm just trying to figure out why there would be litigation, and that seems to be the why of it.

As for the question of what happens to prior promises Novell made, if they are contractual, you go by the contract. In a stock for stock merger, I'm told by a lawyer, all obligations remain in force. In an asset sale, the two negotiate who gets what. But if the buyer *takes over* a contract, then they have to honor all of the terms of the contract, such as a patent license or cross license. Or it can, as part of the deal, insist that the seller renegotiate certain terms or they won't do the deal. What the terms of this deal are, we don't yet know. But what I learned is that shareholders will get more disclosure documents sent to them, and since I know some of my readers are shareholders, perhaps we'll find out more as this goes forward. And on the patents, any time patents transfer, you have to file documents about it with the USPTO, so in time we will get more clarity on that too. Meanwhile, I prefer not to guess too much, and I'm content to wait and get it right.


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