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What's Behind Attachmate's Acquisition of Novell

Yesterday's late breaking IT news featured reports that Attachmate had announced plans to buy Novell for $2.2 billion. After months of speculation as just exactly when Novell would get bought, a deal finally appears to have been tabled that represents a 50% premium over Novell’s valuation at the beginning of this year.

As one of the largest open source vendors with its SuSE product line, Novell's inflated price valuation has surprised many industry commentators who have likened it to the hefty $7 billion price tag placed on Sun by Oracle. Suggestions are that Sun's $1billion MySQL acquisition helped increase its final valuation. So in this case, would Novell be valued so highly if all it had to sell were NetWare and GroupWise, which are arguably not exactly cutting edge technologies?

"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 they certainly intend to leverage this opportunity beyond just SuSE," said Bertrand Diard, cofounder and CEO of Talend.

Diard went on to suggest that the ironic component of this deal is Microsoft’s involvement. After fighting open source for many years, Microsoft is now embracing it. Nobody knows which Novell patents Microsoft is getting as part of the deal now, but 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," said Diard.

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