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Local Tech Wire

The board of directors at software developer (Nasdaq: NOVL) rejected a bid from private equity firm Elliott Associates on Saturday, saying the $2 billion offer is “inadequate.”

In a statement, the board of the Waltham, Mass.-based firm said the bid also “undervalues the company’s franchise and growth prospects.”

Novell is one of Raleigh, N.C.-based Red Hat is Linux software development and services.

Novell will consider other alternatives. The board “has authorized a thorough review of various alternatives to enhance stockholder value. These alternatives include, but are not limited to, a return of capital to stockholders through a stock repurchase or cash dividend, strategic partnerships and alliances, joint ventures, a recapitalization and a sale of the company,” Novell said in a statement.

Elliott Associates made an unsolicited bid of $5.75 a share for Novell on March 2. The firm already owns some 8.5 percent of Novell stock.

Novell shares closed at $5.64 on Friday.

J.P. Morgan is advising Novell on financial matters, Novell said.

Reuters reported, meanwhile, that Blue Harbour Group, which owns 4 percent of Novell shares, backed the board’s decision.

"We support the company’s decision today to pursue a formal review process with the assistance of its advisors," Reuters quoted the investment firm as saying in a separate statement.