EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

03.04.10

GNU/Linux-Savvy Writers View Elliot Associates as Bad Neighbourhood

Posted in Finance, GNU/Linux, Novell, OpenSUSE, SLES/SLED at 3:53 pm by Dr. Roy Schestowitz

Vulture

Summary: People who care about GNU/Linux at Novell are not exactly overlooking the reality of Singer’s “vulture fund”

WE have found some analyses that seem to agree with what we wrote earlier today about the bid for Novell [1, 2, 3]. Here is a prominent OpenSUSE user calling Elliott a “Vulture Fund” over in IDG:

The stock market reaction to the offer was predictable: Novell’s stock surged 27 percent right after the news broke, and it should stay strong for a while until the market figures out if this is a Good Thing.

The Linux community hasn’t raised a big fuss, though I suspect they’re still absorbing the news. I know I am, for my part. In particular, I am wondering what will happen to Novell if they accept this unsolicited bid?

Here is what SJVN wrote in IDG:

Some people in the know, like Canonical’s COO Matt Asay think this deal could work for SUSE. In his view, Elliot would do well to sell off Novell’s Linux division.

I wish I could agree with him, but I looked at Elliot Associates’ past history of taking “an activist approach to investing, frequently amassing significant but minority stakes in distressed or under performing companies and attempting to foment change,” and I don’t like what I see.

Elliot Associates is best known as a ‘vulture fund.’ They don’t make investments to turn companies around. They make investments to crush the cash out of them and then leave the picked over bones for someone else to pick up.

Andy Updegrove, a lawyer, calls it a “Game of Cat and Mouse”.

I haven’t seen any article yet, though, that describes in detail how the high stakes game of tender offers is played, and how the usual process maps (and doesn’t) to a high tech company like Novell. So I thought I’d provide an overview for those that haven’t had occasion to follow a tender offer in the past, and also my thoughts on what may happen over the next several months in this particular game of cat and mouse.

So here goes.

The tender offer game: First up, let’s talk about how the standard drama plays out. It starts with the acquiror trying to pick up as much stock as possible on the sly before it comes out of the closet. That’s because once word gets out that the company (referred to as the “target”) is “in play,” the stock will go up. So the acquiror wants to build as big as stake as possible at the cheapest price it can.

But the securities regulators have long realized that this presents two problems: first, the sellers will feel cheated if they later find out they sold at a steep discount to what others get a short while later, and second, the acquiror will vote all the shares it picks up in favor of the acquisition. So the Securities and Exchange Commission (SEC) requires any company that acquires more than 5% of the stock in a public company to make a public filing disclosing that ownership and its intentions.

That filing is made on form 14D, and it must be regularly updated as the acquiror’s ownership percentage changes, and as its intentions change. When an acquiror files a 14D, it could affirmatively state that it has no intentions of making a tender offer. Depending on the acquiror, that statement might be credible, or it might be viewed with suspicion. But if it affirmatively states that it intends to make a tender offer, or is keeping its options open, then the word spreads – fast.

Novell’s stock may be rising (the valuation of Novell’s assets is discussed at IDG), but that’s not the point. As Chips B. Malroy explains, “If Singer acquires Novell for 1.8 billion, the causal bid, and Novell has 991 million is cash, Singer is only paying 809 million actually. Singer has lowballed the bid, in hope another company will come in and bid more, so that drives up the price of the 8.5% that Elliot already has, profit, short term, mission accomplished. But if that doesn’t happen, and Novell will surely reject the bid, wait for some minor setback in the SCO case, or the next quarterly results from Novell, something bad, and then, true to form, Elliot will reoffer at a lower bid. That is Singer’s modus operandi. By doing this, he causes the stock to tank, so he can buy more cheaply.”

“Singer has lowballed the bid, in hope another company will come in and bid more, so that drives up the price of the 8.5% that Elliot already has, profit, short term, mission accomplished.”
      –Chips B. Malroy
We have already learned that lesson from Carl Icahn. Malroy comments further on “what Singer will do to Novell, should [he] buy it. He will get rid of almost all top management, and most of middle management. Stop all R&R mostly. Stop and or sell any parts of the company not profitable (and transfer the 991 million to Elliot first).”

Perhaps the only positive side is that Mono junk like Banshee can suffer from a takeover of Novell. As we pointed out last week, Novell no longer contributes much to Linux anyway.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. Walmart, Bank of America, Allied Security Trust (AST) and the Rush for 'Blockchain' Patents

    The hoarding of patents on novel-sounding code has reached ridiculous levels; very large corporations and even patent trolls arm themselves with such patents, hoping to make returns by means of litigation or an 'arms trade'



  2. Stupid Blogs, Stupid Lawsuits, and Stupid Patents

    The stupidity of the patent microcosm, which would like to see everything in the world patented and which would gleefully smear or even sue its critics (the EFF was sued several times for libel over its "Stupid Patent of the Month" series)



  3. Perpetuating the Big Lie That Unitary Patent (UPC) is About to Kick Off

    The (in)famous old lie about UPC being "just around the corner" is still being circulated, mainly if not only by patent law firms which stand to benefit from a litigation Armageddon in Europe



  4. EPO Validation in Former French Colonies That Have Zero European Patents

    The strategy of the EPO seems to be centered around the interests of Benoît Battistelli and his political career rather than that of the EPO; validation deals and dubious 'Inventor Awards' seem to be part of this pattern



  5. Saint-Germain's Poisonous Legacy of "Toxic Loans": The Cautionary Tale of SIDRU and Its “Toxic Loans”

    The town where the EPO‘s President (Battistelli) is a deputy mayor has a track record of financial hardship and alleged financial misconduct, attributed to the same financial practices Battistelli has just implemented at the EPO



  6. Links 23/5/2018: DragonFlyBSD 5.2.1 and Kata Containers 1.0 Released

    Links for the day



  7. Masking Abstract Patents in the Age of Alice/§ 101 in the United States

    There are new examples and ample evidence of § 101-dodging strategies; the highest US court, however, wishes to limit patent scope and revert back to an era of patent sanity (as opposed to patent maximalism)



  8. PTAB's Latest Applications of 35 U.S.C. § 101 and Obviousness Tests to Void U.S. Patents

    Validity checks at PTAB continue to strike out patents, much to the fear of people who have made a living from patenting and lawsuits alone



  9. France is Irrelevant to Whether or Not UPC Ever Becomes a Reality, Moving/Outsourcing de Facto Patent Examination to European Courts Managed in/Presided by France

    Team UPC is still focusing on France as if it's up for France to decide the fate of the UPC, which EPO insiders say Battistelli wants to be the chief of (the chief, it has already been decided, would have to be a Frenchman)



  10. Saint-Germain's Poisonous Legacy of "Toxic Loans": The Emperor’s New Investment Guidelines

    Details about a secret vote to 'gamble' the EPO's budget on "a diversified portfolio managed by external experts"



  11. Saint-Germain's Poisonous Legacy of "Toxic Loans": Cautionary Tale for the EPO?

    Preface or background to a series of posts about Battistelli's French politics and why they can if not should alarm EPO workers



  12. Links 22/5/2018: Parrot 4.0, Spectre Number 4

    Links for the day



  13. Chamber of Commerce Lies About the United States Like It Lies About Other Countries for the Sole Purpose of Patent Maximalism

    When pressure groups that claim to be "US" actively bash and lie about the US one has to question their motivation; in the case of the Chamber of Commerce, it's just trying to perturb the law for the worse



  14. Links 21/5/2018: Linux 4.17 RC6, GIMP 2.10.2

    Links for the day



  15. The Attacks on the Patent Trial and Appeal Board (PTAB) Have Lost Momentum and the Patent Microcosm Begrudgingly Gives Up

    The Patent Trial and Appeal Board (PTAB), reaffirmed by the Court of Appeals for the Federal Circuit (CAFC) and now the Supreme Court as well, carries on preventing frivolous lawsuits; options for stopping PTAB have nearly been exhausted and it shows



  16. Software Patenting and Successful Litigation a Very Difficult Task Under 35 U.S.C. § 101

    Using loads of misleading terms or buzzwords such as "AI" the patent microcosm continues its software patents pursuits; but that's mostly failing, especially when courts come to assess pertinent claims made in the patents



  17. António Campinos Will Push Toward a France-Based Unified Patent Court (UPC)

    Frenchmen at EPO will try hard to bring momentum if not force to the Unified Patent Court; facts, however, aren't on their side (unlike Team UPC, which was always on Team Battistelli's side)



  18. In Apple v Samsung Patents That Should Never Have Been Granted May Result in a Billion Dollars in 'Damages'

    A roundup of news about Apple and its patent cases (especially Apple v Samsung), including Intel's role trying to intervene in Qualcomm v Apple



  19. Links 20/5/2018: KDevelop 5.2.2 and 5.2.3, FreeBSD 11.2 Beta 2

    Links for the day



  20. Aurélien Pétiaud's ILO Case (EPO Appeal) an Early Sign That ILO Protects Abusers and Power, Not Workers

    A famous EPO ‘disciplinary’ case is recalled; it’s another one of those EPO-leaning rulings from AT-ILO, which not only praises Battistelli amid very serious abuses but also lies on his behalf, leaving workers with no real access to justice but a mere illusion thereof



  21. LOT Network is a Wolf in Sheep's Clothing

    Another reminder that the "LOT" is a whole lot more than it claims to be and in effect a reinforcer of the status quo



  22. 'Nokification' in Hong Kong and China (PRC)

    Chinese firms that are struggling resort to patent litigation, in effect repeating the same misguided trajectories which became so notorious in Western nations because they act as a form of taxation, discouraging actual innovation



  23. CIPU is Amplifying Misleading Propaganda From the Chamber of Commerce

    Another lobbying event is set up to alarm lawmakers and officials, telling them that the US dropped from first to twelfth using some dodgy yardstick which favours patent extremists



  24. Patent Law Firms That Profit From Software Patent Applications and Lawsuits Still 'Pull a Berkheimer' to Attract Business in Vain

    The Alice-inspired (Supreme Court) 35 U.S.C. § 101 remains unchanged, but the patent microcosm endlessly mentions a months-old decision from a lower court (than the Supreme Court) to 'sell' the impression that everything is changing and software patents have just found their 'teeth' again



  25. A Year After TC Heartland the Patent Microcosm is Trying to 'Dilute' This Supreme Court's Decision or Work Around It

    IAM, Patent Docs, Managing IP and Patently-O want more litigation (especially somewhere like the Eastern District of Texas), so in an effort to twist TC Heartland they latch onto ZTE and BigCommerce cases



  26. Microsoft Attacks the Vulnerable Using Software Patents in Order to Maintain Fear and Give the Perception of Microsoft 'Safety'

    The latest patent lawsuits from Microsoft and its patent trolls (which it financially backs); these are aimed at feeble and vulnerable rivals of Microsoft



  27. Links 19/5/2018: Mesa 18.0.4 and Vim 8.1

    Links for the day



  28. Système Battistelli (ENArque) at the EPO is Inspired by Système Lamy in Saint-Germain-en Laye

    Has the political culture of Battistelli's hometown in France contaminated the governance of the EPO?



  29. In Australia the Productivity Commission Decides/Guides Patent Law

    IP Australia, the patent office of Australia, considers abolishing "innovation patents" but has not done so yet (pending consultation)



  30. Fishy Things Noticed Ahead of the Passage of a Lot of EPO Budget (Applicants' Money) to Battistelli's Other (and Simultaneous) Employer

    Observations and odd facts regarding the affairs of the council in St Germain; it certainly looks like Battistelli as deputy mayor and the mayor (Arnaud Péricard) are attempting to hide something


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts