Novell to Buy WordPerfect for $1.4 Billion : Computers: The union would create a software powerhouse combining the world leader in PC networking with the dominant force in word processing.
In keeping with the software industry’s urge to merge, heavyweight Novell Inc. agreed Monday to buy WordPerfect Corp., its Utah neighbor and longtime ally, for $1.4 billion in stock and options.
The union would create a formidable software industry competitor combining the world leader in the booming personal computer networking business with the dominant force in word processing.
Novell also announced that it has agreed to purchase the Quattro Pro spreadsheet business of troubled Borland International Corp. for $145 million, a deal that would enable Novell and WordPerfect to offer a leading spreadsheet with their other products.
Software “suites,” in which a spreadsheet, word processor and other applications are bundled into a coherent whole and sold together, are increasingly popular. Taken together, Novell’s actions are in keeping with a trend in American businesses away from stand-alone, single-user personal computer applications toward software packages and group collaboration.
“Novell’s objective is to accelerate this market transition,” said Raymond J. Noorda, Novell’s founder, president and chief executive.
Under the WordPerfect deal, shares of WordPerfect common stock and options would be exchanged for about 59 million shares of Novell. WordPerfect would become a subsidiary of Novell and form the centerpiece of a new group focusing on applications software, such as word processors.
Novell, based in Provo, Utah, is the world leader in networking software, which ties computers together and allow users to share information. It also develops network services, computer operating systems and software to make programming easier. Privately held WordPerfect, based in Orem, develops applications.
In the fiscal year ended in October, Novell had sales of $1.12 billion. WordPerfect, for the year ended in December, posted revenue of about $700 million.
Combined, the two companies would be well-situated to develop applications for customers and deliver them efficiently. In addition to word processing, WordPerfect has developed programs relating to electronic documents, electronic mail, the generation of forms and other uses.
The deal thus would give Novell a chance to compete more broadly with Microsoft, an applications and operating system leader that is trying hard to penetrate Novell’s networking business.
“This is a very natural partnership, a smart move for both companies,” said Chuck Stegman, an office automation analyst with Dataquest, a market research company in San Jose. “It creates a viable alternative to Microsoft for developing corporate applications.”
As pioneers in Utah’s “Software Valley,” a stretch of hundreds of companies south of Salt Lake City, Novell and WordPerfect have long been friendly and have often teamed up in recent years in efforts to develop computing standards. Four years ago, they briefly talked about merging, but officials said then that the time was not right.
Their unusual spirit of cooperation grows in large part from the region’s close ties to the Church of Jesus Christ of Latter-day Saints. The two companies, about 10 minutes apart on Interstate 15, jointly employ about 9,000 people, many of them Mormons.
Heading the new application software product group at Novell would be Adrian Rietveld, who on Jan. 1 became president and chief executive of WordPerfect. He succeeded co-founder Alan C. Ashton. Rietveld would become the fourth member of Novell’s office of the president, from which the company expects to choose a successor to the aging Noorda.
In Nasdaq trading, Novell shares finished down 25 cents Monday at $23.75.
Meanwhile, with the sale of Quattro Pro, Borland loses about 25% of its business. The company, based in Scotts Valley, Calif., said it expects to report a big decline in sales and a sizable operating loss for the quarter and year ending March 31. It also said it will incur costs from a planned restructuring. The company also said its chief financial officer, Alan Henricks, has resigned.
Other high-profile mergers in the industry include the unions of Intuit and ChipSoft, makers of personal finance and tax preparation software, and Electronic Arts and Broderbund, makers of interactive games and educational products.
Last week, Adobe Systems Inc. and Aldus Corp., pioneers in the desktop publishing market, announced plans to merge.