Business software maker Novell Inc. (Nasdaq: NOVL) said Monday it has found a new suitor to take over the company after rejecting a lower offer from a private equity firm earlier this year.

Novell is one of the biggest competitors in the Linux software space with Raleigh-based Red Hat (NYSE: RHT). It offers a brand of Linux called SUSE. Attachmate plans to operate SUSE as a separate business unit.

As part of the deal, some of Novell’s intellectual property is being acquired by Microsoft-backed companies for some $450 million, Novell said.

Novell, based in Waltham, Mass., said Attachmate Corp. has agreed to pay about $2.2 billion in cash, or $6.10 per share.

That tops an offer of $5.75 per share that Elliott Associates L.P. made back in March, a bid that valued the company at about $2 billion.

As a part of the deal announced Monday, Elliott will get a stake in Attachmate.

The new offer represents a premium of 27 percent over Novell’s closing share price of $4.80 on March 1, the day before Elliott Associates made its offer.

Novell shares climbed 37 cents, or 6.6 percent, to $5.96 in morning trading.

The full press release from Novell follows:

Attachmate, based in Seattle, is owned by private equity firms Francisco Partners, Golden Gate Capital and Thoma Bravo.

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.

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