Novell, a Utah-based maker of network systems, said it would pay $1.4 billion in stock for WordPerfect, which makes one of the most popular word-processing programs, and $145 million for Borland’s Quattro Pro spreadsheet business. The deals will almost double Novell’s annual sales to $1.9 billion, making it a closer second to industry giant Microsoft, which racked up $3.8 billion in its last fiscal year.
The WordPerfect plans looked a bit shaky at the weekend, as a drop in Novell’s stock sliced the value of the deal. One worry: can Novell swallow new business even as it struggles to name a successor to ailing 69-year-old founder Ray Noorda? But analysts agreed that Novell has no choice but to follow this inexorable trend. just in recent weeks, mergers were announced between desktop-publishing outfits Adobe and Aldus and “edu-tainment” companies Broderbund Software and Electronic Arts. The industry is consolidating for the usual reasons: competition for market share is ferocious, global reach is critical and prices have dropped sharply. In that environment, size has become a virtue.
