Gossip in Wall Street parlours has it that Unix System Laboratories Inc has been running its spreadsheets over the Santa Cruz Operation Inc over the last few months – with takeover in mind. It is calculated that Unix Labs must achieve critical mass almost overnight to keep at bay the threat from Microsoft Corp’s Windows New Technology and ensure a successful public offering in the next year or so. Santa Cruz, whose revenues are thought to be about double those of Unix Labs and whose investors are said to want to cash in, makes no secret of the fact that it has been contemplating its own initial public offering for some time. However, its founders, Larry and Doug Michels, are now said to be reluctant because the future is uncertain – it’s a heck of a time to have to start posting quarterly reports. The Mexican stand-off between Unix Labs and Santa Cruz is thought to be over price. A problem for Unix Labs is that it doesn’t have the cash to buy the firm and the investors that want to sell out are unlikely to want to swap untradable Unix Labs paper for untradable Santa Cruz paper. But Unix Labs may well be able to persuade some of its outside investors such as Novell Inc to chip in for the sake of taking a competitor out of the market. An intriguing sidebar to the story is that Microsoft still retains a significant minority holding in Santa Cruz operation.
