Novell to buy SilverStream for $212 m

PROVO: Networking software maker Novell Inc. said on Monday it would buy

SilverStream Software Inc. for $212 million in cash in an effort to boost its

Web-based business offerings.

Novell plans to pay $9 per SilverStream share, a 75 per cent premium over

Friday's closing price of $5.14 on Nasdaq. The deal is expected to close as

early as July.

"That's a big premium," Jack Messman, chairman, president and chief

executive of Novell, said in an interview. However, SilverStream should have

about $100 million in cash when the deal closes, which would yield a net cash

outlay by Novell of about $112 million.

That would bring the per-share price, for 23.6 million outstanding shares, to

around $4.75, Messman said. The company expects the acquisition will be slightly

dilutive to earnings in 2003 and will add to earnings in 2004. For the current

fiscal year, the deal is expected to contribute one per cent to Novell's

revenue.

Novell does not anticipate any layoffs as a result of the acquisition of

Billerica, Massachusetts-based SilverStream, Messman said.

Acquiring SilverStream and its application server technology will give Novell

a boost in the competitive Web services arena, according to Messman. Application

server software is used by corporations to develop programs that run their

operations over the Internet.

International Business Machines Corp., BEA Systems Inc., Sun Microsystems

Inc. and Microsoft Corp. are among the companies racing to gain the leadership

position in the market. Under Web services, disparate computers and programs are

able to talk to each other to enable seamless electronic business.

Novell, a powerhouse in the early and mid-1990s with networking and directory

technologies, has watched other companies flourish in the Internet era. "We

believe the market has somewhat come back to us, even in this new space called

'Web services,'" he said. "Web services is the next frontier."

The deal has been approved by both boards of directors and 20.3 per cent of

the outstanding shares, including those held by SilverStream chief executive

officer David Litwack, have agreed to tender their shares.

(C) Reuters Limited.