Novell has spurned a $2 billion (Dh7.3bn) takeover offer from investment fund Elliott Associates, calling the bid inadequate and saying it undervalued the business software maker.
Novell said its board had instead initiated a review of alternatives, including a share buyback, cash dividend, joint ventures, recapitalization, alliances or an outright sale.
Elliott Associates announced its $5.75 a share offer on March 2, sending Novell's stock soaring 28 per ent as investors hoped it would trigger a bidding war and put the world's No2 maker of the open source Linux operating system into play. "It undervalues the company's franchise and growth prospects," Novell said in a statement.
The Blue Harbour Group, which owns four per cent of the company, agreed with the board.
"We support the company's decision today to pursue a formal review process with the assistance of its advisors," the investment firm said in a separate statement.
Analysts say large software makers may consider bidding as they could sell their business programmes alongside Novell's version of Linux, used widely by financial institutions and telecommunications carriers.
Companies including HP, SAP and IBM could swoop in with a rival bid, analysts say.
Elliott, which already owns 8.5 per cent of Novell, had offered at the time to pay a 21 per cent premium for a company that has been hurt by competition and struggled to boost sales. In 2009, Novell's revenue declined about 10 per cent.
Shares in the company – which has nearly $1bn in cash and saw its stock surge above $6 in the wake of the bid – closed on Friday at $5.64. Elliott, an investment firm with more than $16bn in assets under management, has gone after undervalued companies before and has targeted other technology firms, including Epicor and Packeteer. Novell's key rivals include Microsoft, Oracle Corp and Red Hat, while customers range from Wal-Mart Stores and Wyndham Worldwide Corp to Casio Computer.