Plunging headlong into applications to complement its big system software business, Novell Inc late Tuesday announced definitive agreement to acquire WordPerfect Corp for about $1,400m in shares, and to pay $145m for Borland International Inc’s Quattro Pro spreadsheet. The agreed bid for Wordperfect comes as little surprise: the word processor market leader has long made it clear that it would prefer to be acquired than to float as a public company, and has previously come close to tying the knot with both Novell and Lotus Development Corp. It is already close to Novell on the marketing side, with shared support operations and distribution channels, so the potential for savings and economies of scale are limited. Buying Quattro Pro makes the moves a much bigger deal for Novell, since it immediately makes it a serious applications play without going through the stage of being viewed as a one-application company. Borland is selling Quattro Pro because it desperately needs the cash and because its rock-bottom pricing strategy has failed to take the spreadsheet beyond third place in the market behind Microsoft Corp’s Excel, and Lotus 1-2-3. Novell will issue 59m new shares for Wordperfect, which will represent about 15% of the enlarged company. It believes that it can add value to the applications by applying its networking expertise to them. WordPerfect will become a wholly-owned subsidiary and core of a new application software product group under Ad Rietveld, its present president and chief executive, who also joins Novell’s office of the president. Sale of Quattro Pro also divests Borland of its Borland Office integrated package, which includes the spreadsheet and Wordperfect, and leaves it as a database and programming languages company. Borland warns that it expects to report a significant decline in revenues and a substantial operating loss for the fiscal quarter and year ending March 31; it intends to restructure – downsize – the company and will be taking a substantial hit against its figures to cover the cost. Terms of the Quattro Pro sale entitle Novell to reproduce up to 1m copies of the Paradox for Windows database for use in whatever it decides to call Borland Office in future. Some 100 Borland employees directly involved in Quattro Pro activities will be offered positions with Novell. Novell has not assumed any liability with respect to Lotus Development Corp’s litigation with Borland over Quattro Pro. The enlarged Novell will have annual sales running at some $1,900m including $70m from Quattro Pro – which makes it about half the size of Microsoft.
