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New York-based hedge fund Elliott Associates L.P. in a letter to Novell’s board of directors dated March 2 offered to purchase the infrastructure software company for a cash price of $5.75 per share, or $1 billion net of the cash on the company’s books.

Elliott at the time already owned 8.5 percent of Novell and solicited to take the company private for $2 billion.

This morning, Novell’s board publicly responded to the letter, deeming the “unsolicited, conditional proposal” from the hedge fund “inadequate”. It’s not hard to see why Novell feels that way: immediately after the initial purchase offer was made, its shares surged as investors hoped for a better bid, and stock value hasn’t decreased much since.

Shares were valued at 5.64 at market’s close on Friday – it was priced 4.20 at the beginning of this year and 4.75 when Elliott made its purchase offer public on March 2.

Novell’s board of directors also announced that they will look for alternatives for the company to enhance stockholder value, including a sale of the company to another entity, joint ventures, partnerships or a return of capital to stockholders through a stock repurchase or cash dividend program.

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