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Elliot Associates’ worrisome Novell plans

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Elliot Associates L.P., a hedge fund, which claims to already own 8.5% of Novell’s stock made an unsolicited bid to buy the Linux company lock, stock, and code for $1.8 billion on March 2nd. This move may be good for Novell stock owners, but I fear it may be death for Novell’s commercial SUSE Linux and community openSUSE distributions.

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.

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