Elliott Associates LP, a hedge fund with an 8.5 percent stake in software corporation Novell Inc., has put out an offer to purchase the company in its entirety for $1.8 billion.
Shares of Novell, surged 30 percent following the announcement, up to $6.15, 40 cents above the $5.75 offer price presented by Elliott.
Along with its bid, Elliot described the ways in which it believes Novell is underperforming and how their business would benefit from the structuring and execution insight of the hedge fund. Elliot criticized the company’s attempts to shift their focus from their original business strategy and referred to acquisitions "that have largely been unsuccessful," in the bid letter to the company.
Novell, which is involved in proprietary software, reported first-quarter profit increases of 89 percent despite revenue slipping 5.8 percent. Among other tasks, Novell has been working toward growing the presence of its Linux-based operating system, Moblin, in popular, lower-end netbooks.
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