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Novell snares Cambridge
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March 12, 2001: 6:16 p.m. ET
Novell stock deal worth $266 million aims to boost company's business shift
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NEW YORK (CNNfn) - Computer networking software vendor Novell Inc. said Monday it will buy technology consulting firm Cambridge Technology Partners Inc. for $266 million in stock.
The acquisition, which has been approved by the boards of directors of both companies, is aimed at helping the company sharpen its focus on more specialized segments within the software industry, specifically the market for "directory-enabled" network applications and services, which are used to unify and manage disparate directories residing on a common network infrastructure.
The idea is to tap into the market for the software and services needed by companies that are shifting their businesses onto the Internet.
Provo, Utah-based Novell has been struggling financially as its mainstay product, called Netware, which is used to connect workstations on local area networks, has faced increasing competition from Microsoft's Windows products as well as the growing popularity of the freely distributed Linux operating system. 
During the past two quarters, Novell (NOVL: Research, Estimates) has taken a number of steps in an effort to realign its business to adapt to the changing environment, including a broad restructuring under which it laid off 900 employees, or about 16 percent of its total work force.
By taking the Cambridge, Mass.-based firm into the fold, executives at Novell said they will be able accelerate their transition to the new business model.
"This is exactly what's needed to propel Novell into a new realm of solutions-based relationships with customers and partners," Eric Schmidt, Novell's chairman and chief executive, said in a statement. "This move is strategically consistent with where we are taking Novell. The combined talent of Novell and Cambridge will bring us closer than ever to capturing the value of Novell's Net services strategy."
Schmidt said consulting services have become associated with virtually every major deployment of Novell's new "eDirectory" and "Net services" products. Novell also has been building its own consulting business, which he said not accounts for roughly 5 percent of the company's total revenue.
 When the Cambridge (CATP: Research, Estimates) deal is complete, which is expected to be during the third quarter, consulting services will represent more than one-third of Novell's business, Schmidt said.
Under the terms of the deal, Novell will exchange .668 shares of its common stock for every outstanding share of Cambridge's stock. The transaction value is based on Novell's closing stock price of $6.06 on March 9th last week.
Jack Messman, president and CEO of Cambridge and a member of Novell's board, will become CEO of the combined company. Schmidt will continue his role as chairman of the Novell board of directors and take on the additional moniker of "chief strategist" for the company.
Shares of Novell fell 25 cents to $5.81 on Nasdaq ahead of the news, which was released after the closing bell. They were unchanged in after-hours trade.
Cambridge shares were up 56 cents at $3.66 in after-hours trade after falling 22 cents to $3.09 on Nasdaq before the announcement. 
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