Novell eyes services firm

Novell Inc. hopes to add a third leg to its Internet-products strategy, dubbed one Net, with an offer this month to buy SilverStream Software, a specialist in Web services application development tools, for about US$212 million.

The acquisition of SilverStream Software Inc., based in Billerica, Mass., will extend Novell’s offerings, enabling it to help enterprises deploy advanced Web applications, the company said in a statement.

A move into the Web services market will add a third leg to Novell’s one Net plans. The other two are Novell’s Cambridge Technology Partners consulting division, and the cross-platform infrastructure provided by its security and directory technologies, the company said.

SilverStream’s technology, particularly eXtend Workbench, gives Novell the kind of application development tools that will help drive the company’s Web services strategy, according to analysts.

“It’s a powerful set of development tools that tie together Web services and existing systems, giving companies a great return on their assets investments,” said James Governor, industry analyst at Illuminata in London.

Governor touted eXtend Workbench’s ability to wrap legacy AS/400 and mainframe systems for use with Java and Web services, as well as its XML transformation functionality.

“Novell doesn’t want to get into the business of selling a ‘rip and replace’ solution, given its huge installed base,” Governor said. “SilverStream’s products allow them to integrate.”

Both boards of directors have unanimously approved the deal, and SilverStream shareholders that hold 20.33 per cent of the shares have agreed to tender their shares, Novell said. The deal requires the approval of the holders of 90 per cent of the shares, and still has to clear the usual regulatory approvals, it said. If shareholders support it, the deal could close in July.

Novell plans to rebrand SilverStream’s eXtend software line as its own, and SilverStream president and chief executive officer David Litwack will become a senior vice-president of Novell if the deal closes.

The US$212 million price tag is based on a cash offer of US$9 per SilverStream share, with approximately 23.6 million shares expected to be outstanding if the deal closes in July as planned. However, the Provo, Utah, company will only have to lay out around US$112 million in cash, as SilverStream is sitting on a US$100 million pile of cash.