Microsoft's intellectual property vault has been bolstered with some 882 more software patents after open source vendor Novell was acquired for US$2.2 billion (AU$2.2 billion) late yesterday.
Novell's main buyer is Attachmate, a connectivity solutions and security software company owned by an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo.
But as part of the deal, Attachmate will sell certain intellectual property assets to CPTN Holdings, a consortium of technology firms headed by Microsoft, for US$450 million. SEC filings have revealed that these assets include 882 software patents.
Microsoft and Novell already had a solid relationship after coming together in 2006 in a partnership designed to ensure interoperability between proprietary and open source software – namely Windows and Linux.
The pair formed a controversial and surprising agreement whereby Microsoft would allow Novell’s SUSE Linux customers to carry on using the open source software without having to worry about Microsoft issuing patent lawsuits.
Novell had turned down an acquisition proposal from Elliott Associates for around US$1.8 billion. Following this rejection, and some disappointing quarter results announced in August, Novell’s directors said they would seek ways of improving stockholder value, including a sale of the company.
“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 chief executive (CEO) of Novell.
“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.”
Attachmate, whose owners also control system management firm NetIQ, will look to operate Novell as two separate business units under the names of Novell and SUSE.
Novell said it expected the deal to go through in the first quarter of 2011.
Clive Longbottom, business process analyst at Quocirca, said he thought US$2.2 billion appeared “a lot of money to pay”.
“If I was sitting there looking at [US$2 billion] coming in, I’d probably be quite happy as a Novell shareholder,” Longbottom said.
“[But] as a Novell customer, I’d be very worried.”
