In a deal worth $255 million, Novell will acquire consultancy firm Cambridge Technology Partners, with Eric Schmidt stepping down as CEO to make room for Jack Messman, current CEO of Cambridge.
The network software vendor will buy the company in a stock swap deal. Novell says the acquisition will significantly expand its ability to deliver consulting support to customers and other IT services companies.
Novell board member Jack Messman, who is president and CEO of Cambridge, will assume the role of CEO at Novell. Eric Schmidt will continue as chairman of the Novell board of directors, and will accept the position of chief strategist for the company. Schmidt referred to Messman as a "world superstar" at day-to-day management, and feels "he`ll do a better job than I".
"I think it`s something that`s been kept a very closely guarded secret in the company, but it`s been something that`s been cooking for quite a while," says Richard Beytagh, MD of Novell SA. "The fact that Eric [Schmidt] is stepping out of his CEO role is very good from my perspective, as he`s very good at strategy, and one of our particular problems has been communicating our strategy, which he will now be able to focus on."
"Eric has defined a compelling vision of Net services software," says Messman. "We see an even broader and deeper portfolio of solutions that our combined teams are eager to support and extend through developmental innovation aimed at solving clients` business problems."
"This move is strategically consistent with where we are taking Novell," comments Schmidt. "The combined talent of Novell and Cambridge will bring us closer than ever to capturing the value of Novell`s Net services strategy."
Two years ago, Novell committed itself to achieving 30% of its revenue stream through consulting services by 2002. It says this acquisition will help it reach this goal.
"I think the deal is a little more strategic than just trying to achieve that percentage," comments Beytagh. "Cambridge comes with 3 500 people plus a CEO, all of whom are very solutions-focused."
Under terms of the agreement, Novell will exchange .668 shares of Novell common stock for every outstanding Cambridge share. The transaction is valued at approximately $266 million based on the $6.06 closing price for Novell shares on 9 March 2001.
The acquisition will be accounted for as a purchase and is expected to be completed in the third quarter of Novell`s fiscal 2001.
Cambridge, which will become a wholly owned subsidiary of Novell, has reported slipping revenues and its share price has fallen 94% from its peak in July.
Novell announced yesterday that it has also acquired privately-held Novetrix.
Novetrix`s DeFrame thin-client application delivery software has been integrated into the new release of Novell OnDemand Services with plans to extend the technology to Novell`s desktop management and Net services offerings.
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