In a teleconference on January 19th with the judge handling that class action litigation, the shareholders said they wouldn't try to block the merger, but on the 24th, they sent a letter to Novell claiming there is information that is either "omitted from" the proxy statement or is included but is "misleading" . The SEC filing responds to the concerns.
What are they? One is, what would Novell's value be if the merger doesn't happen but the patent deal does? The shareholders claim that a Jesse Cohn of Elliott "was in contact with the sponsors of Attachmate about a Novell deal as early as January 2010, and that his communications with Attachmate continued throughout the sales process Novell’s board of directors initiated soon after Elliott’s March 2010 offer." Was he promised that Attachmate would give the Elliott folks a seat on the board or some "other arrangement that would give Elliott a greater role than just minority shareholder of Attachmate"? The shareholders also allege "that Elliott and Attachmate expect to receive significant synergies in the near term." I'd certainly like to know what they know that we don't.
Novell responds to all the questions in the
THE MERGER All of this matters because the patent deal is contingent on certain things happening, among them approval by antitrust regulatory bodies, as Novell explained in the proxy statement:
The following disclosure supplements the discussion beginning on page 29 of the Definitive Proxy Statement summarizing the material terms of the merger.
The $6.10 per share merger consideration being offered by Attachmate includes a price per share to acquire all of Novell’s then available cash, cash equivalents and short-term investments. The Merger Agreement requires us to have approximately $1,030,000,000 in cash and cash equivalents as a condition to Attachmate’s obligations to consummate the merger. As reflected in materials presented to our board of directors in March of 2010, as of January 31, 2010, Novell held approximately $991,292,000 in unrestricted cash, cash equivalents and short-term investments, or approximately $2.83 per share, based on approximately 350,576,000 shares of common stock outstanding. As of October 31, 2010, the end of the most recent fiscal quarter preceding our board of directors’ approval of the Merger Agreement, Novell held approximately $1,126,690,000 in unrestricted cash, cash equivalents and short-term investments, or approximately $3.16 per share, based on approximately 357,005,000 shares of common stock outstanding. There can be no assurances as to the amount of cash, cash equivalents or short-term investments that may be available to Novell as of any date scheduled for closing of the merger or otherwise.
THE MERGER – FINANCIAL PROJECTIONS
The following disclosure supplements the discussion beginning on page 55 of the Definitive Proxy Statement concerning the disclosed financial projections.
The projections of our overall revenue were also prepared taking into account the declines in our product revenue experienced during fiscal 2010 that primarily resulted from weakness in our legacy products as well as, we believe, the uncertainty associated with our review of various alternatives to enhance stockholder value.
THE MERGER – ATTACHMATE VOTING AGREEMENT
The following disclosure supplements the discussion beginning on page 63 of the Definitive Proxy Statement concerning the Attachmate Voting Agreement and other agreements entered into by the Elliott Parties with the Attachmate Group.
The Elliott Parties are not entitled to any consideration from Novell in the merger other than the $6.10 per share cash consideration for eligible shares of our common stock held by them. Novell is not a party to any agreement with the Elliott Parties other than with respect to the non-disclosure letter entered into by Elliott Associates, L.P. (“Elliott”) with us on August 6, 2010. Although we were aware that Attachmate’s proposed financing arrangements contemplated that certain parties might be permitted to roll over ownership interests in Novell in connection with such financing, we were not a party to any discussions or negotiations relating to such arrangements, and at the time of our board of directors’ approval of the Merger Agreement we had no information regarding the arrangements that may have been negotiated by the Elliott Parties with the Attachmate Group or otherwise with respect to participation in the management of Attachmate following the closing of the merger. Further, Novell is not aware of any discussions between the Attachmate Group and the Elliott Parties that might have preceded the Attachmate Group’s request to us to speak with the Elliott Parties in late July 2010 in
connection with Attachmate arranging financing for a potential transaction with us relating to purported preferential treatment for the Elliott Parties by Novell in the merger in relation to other stockholders. For additional information regarding the Elliot Parties’ involvement in our sale process, see “The Merger – Background to the Merger.”
THE MERGER – LITIGATION RELATED TO THE MERGER – THE DELAWARE ACTION
The following disclosure supplements the discussion beginning on page 64 of the Definitive Proxy Statement concerning the Delaware Action.
On January 19, 2011, in a teleconference before the Delaware Court of Chancery, plaintiffs in the Delaware Action committed not to attempt to enjoin either the stockholder vote or the closing of the merger in part due to the disclosures made in the Definitive Proxy Statement.
However, on January 24, 2011, plaintiffs sent a letter to Novell in which they assert that the following information is either omitted from or misleading in the Definitive Proxy Statement:
1) the background of Elliott’s involvement in the process that led to the merger;
We continue to believe that the aforementioned lawsuit and the other lawsuits discussed in the Definitive Proxy Statement are entirely without merit, and that the information that these lawsuits allege was omitted from or misleading in the Preliminary Proxy or the Definitive Proxy Statement is inaccurate, not material or is otherwise disclosed in the Definitive Proxy Statement or this supplement. The Novell defendants each have
denied, and continue to deny, that they have committed or aided and abetted in the commission of any of the wrongful acts alleged in these lawsuits, and maintain that they diligently and scrupulously complied with their fiduciary and other legal duties. The Novell defendants intend to vigorously defend against these lawsuits.
2) that Jesse Cohn of Elliott was in contact with the sponsors of Attachmate about a Novell deal as early as January 2010, and that his communications with Attachmate continued throughout the sales process Novell’s board of directors initiated soon after Elliott’s March 2010 offer;
3) that these communications included proposals for Elliott’s participation in a Novell/Attachmate merger and demands that Elliott be treated better than other Novell stockholders;
4) whether Elliott’s participation was the result of the undisclosed contact between Attachmate and Elliott described in the preceding paragraph;
5) Attachmate’s ability to finance the merger, including whether Elliott’s equity participation with Attachmate was necessary because Attachmate was having difficulty obtaining the necessary financing for the merger;
6) the value of Elliott’s consideration for its Novell shares, and whether the Novell board of directors knows the value of what Elliott is getting in the merger;
7) that Elliott and Attachmate expect to receive significant synergies in the near term;
8) whether Attachmate promised Elliott a seat on Attachmate’s board, or any other arrangement that would give Elliott a greater role than just minority shareholder of Attachmate;
9) the value of Novell if the stockholders vote down the merger but the patent sale closes;
10) the reason why the management projections on which J.P. Morgan relied in November 2010 were dramatically lower than the management projections on which J.P. Morgan relied in March 2010; and
11) the firm value on a per share basis in March compared to November 21, 2010 after subtracting out the cash on hand.
THE MERGER – REGULATORY MATTERS
The following disclosure supplements the discussion beginning on page 80 of the Definitive Proxy Statement concerning the competition filings in the United States and Germany with respect to the merger and the patent sale contemplated by the Patent Purchase Agreement, dated as of November 21, 2010, by and between CPTN Holdings LLC and us.
The waiting period under the HSR Act with respect to the merger expired at 11:59 p.m. EDT, on February 2, 2011.
Also on February 2, 2011, each of CPTN and Novell received a Second Request from the DOJ regarding the sale of certain identified patents and patent applications to CPTN contemplated by the Patent Purchase Agreement. The Second Requests have the effect of extending the waiting period under the HSR Act until 30 days after both parties have substantially complied with the Second Requests, unless the waiting period is earlier terminated. Novell is in the process of gathering information to respond to this Second Request and is continuing to cooperate fully with the DOJ in connection with its review.
ATTENDING THE SPECIAL MEETING
Novell reserves the right to limit attendance at the special meeting and any adjournment or postponement thereof to record and beneficial stockholders as of the record date, January 12, 2011, and individuals holding a valid proxy from a record holder. If you are a stockholder of record, your name will be verified against the list of stockholders of record prior to your admittance to the special meeting and any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If your shares are held in “street name,” you will need to provide proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned our stock as of the record date, a copy of a voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above upon request, Novell reserves the right to refuse you admission to the special meeting and any adjournment or postponement thereof. Novell reserves the right to inspect all persons and their property. Check-in will begin at 8:30 a.m., local time.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read our SEC filings, including the Definitive Proxy Statement and this supplement, through the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information about the public reference room.