Novell Shareholders Vote Yes for $2.2 Billion Attachmate Acquisition

February 21, 2011 Timothy Prickett Morgan

Host access, application modernization, and security software maker Attachmate is that much closer to closing its $2.2 billion acquisition of systems software maker Novell.

Last week, in an 8K filing with the Securities and Exchange Commission, Novell said that a sufficient number of its shares were pledged to the Attachmate deal for it to get done–provided government regulators in the United States and Germany give it the go ahead. Either by showing up to a special meeting in the company’s Waltham, Massachusetts, headquarters or sending in proxies, people and companies with an aggregate of 66.4 percent of the company’s 352.8 million outstanding shares voted “Yes” to the acquisition.

The deal, you will remember, includes a provision for and is still contingent upon the sale of 882 of Novell’s patents to a holding company called CPTN Holdings, which was created by Microsoft and is backed by Apple, Oracle, and EMC. CPTN is buying those patents for $450 million, and when you take into account the just over $1 billion in cash that Novell has, Attachmate is only really paying $706.3 million to acquire Novell. That is about 87 percent of Novell’s revenues for its fiscal year ended in October.

Novell, Attachmate, and the CPTN Holdings companies have not divulged what patents are being sold, but Novell has said that they have nothing to do with any Unix intellectual property. Presumably they have nothing to do with Linux either, and that leaves patents relating to NetWare, GroupWise, and other systems software.

Regulators in the Antitrust Division in the Justice Department here in the United States have requested additional information about the deal, as has the German Bundeskartellamt antitrust regulator, because of concerns over the patent transfers that Attachmate wants to do to help cut the costs of the Novell deal.

It will be interesting to see what Attachmate does with Novell’s SUSE Linux Enterprise Server, which runs on IBM mainframe and Power Systems as well as X64-based machines and even Itanium-based boxes. I would not be surprised to see Attachmate cut back on Itanium support, as Red Hat has done with Enterprise Linux 6 and as Microsoft will be doing with the Windows Server version after the 2008 editions. Considering the connections that Attachmate has to IBM mainframe and i platforms, it seems unlikely SUSE Linux will be mothballed on System z and Power Systems platforms. But Attachmate might be looking for some help from IBM to give it a leg-up on Red Hat on IBM’s own platforms. It would not be surprising to see Attachmate create a hardened Mono runtime environment for Linux instances on Power and mainframe iron, giving customers a way of running .NET applications on Power and mainframe iron in an indirect way.