DOW JONES NEWSWIRES Novell Inc. (NOVL) on Saturday rejected an unsolicited bid by hedge fund Elliott Associates LP to buy the company for about $1.8 billion, saying the deal undervalued Novell and its growth prospects. However, the software company essentially put itself up for sale, saying it will look at several alternatives to enhance shareholder value. On Monday, Elliott appeared undeterred, saying it welcomes "the board's decision to conduct a sale of the company, which we believe is the best way to maximize shareholder value." It said it "looks forward to actively pursuing an acquisition" with its $5.75-a-share offer, which it made March 2. Shares of Novell were up 4.6% in premarket trading to $5.90. As of Friday's close, the stock had risen 37% in the past year, trailing the broader market. Elliott, which is the third-biggest holder of Novell shares, has said it already holds an 8.5% stake. Elliott started buying Novell shares Jan. 4. On Saturday, private investment firm Blue Harbour Group, which owns 4% of Novell shares--making it the eighth-biggest holder--said it agreed that the Elliott bid undervalued the company. Like many of its peers, Novell, which works with open source and proprietary software, is trying to control costs as revenue falls. The company has been trying to boost the presence of its Linux-based operating system, Moblin, in low-end netbooks, which have become very popular. -By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com
