Novell’s Acquisition: Why it Makes Sense

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In a release issued yesterday, Attachmate announced that it plans to buy Novell for $2.2b.* This is significant for Talend, and for everyone involved in commercial open source, because Novell is one of the largest open source vendors with its SuSE product line.

This deal represents a 50% premium over Novell’s valuation at the beginning of this year. Of course, speculation about a takeover did fuel Novell’s share price, but how much of Novell’s valuation comes from open source?* Many speculated that Sun’s hefty $7b price tag was in great part due to its $1b MySQL acquisition (a nice ROI…).* In this case, would Novell be valued so much if all it had to sell were NetWare and GroupWise? (not exactly cutting edge technology)

This acquisition does not make a lot of sense for Attachmate – no one sees any product or market synergy in this deal – but it does make sense for Attachmate’s investors, Francisco Partners, Golden Gate Capital and Thoma Bravo who are getting their hands on a golden nugget – a leading open source product, well deployed and with deep open source know-how.* Open source is the next generation model for producing software, and Attachmate’s investors understand that.** By acquiring Novell, they are buying their ticket into this market, and certainly intend to leverage this opportunity beyond just SuSE.

The ironic component of this deal is Microsoft’s involvement.* After fighting open source for many years, Microsoft is now embracing it.* Which Novell patents is Microsoft getting as part of the deal? Nobody knows rights now.* It will be interesting to see how much they contribute to Microsoft’s open source strategy.

At the end of the day, this acquisition is good news.* It proves one more time that open source creates opportunities for investment, and that open source vendors can thrive, grow, and play on the enterprise scene.

Bertrand




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