Is Novell's Linux business still up for sale?

Observers say the dust hasn't settled on the so called Attachmate-Novell merger --and that Novell's Linux business may still be up for sale.

Attachmate is owned by an investment group led by Francisco Partners, Golden Gate Capital and Thoma Bravo.

"It's not Attachmate buying Novell. It's really a private equity deal to buy Novell ... clean it up, combine it with Attachmate and NetIQ as a $1 billion company which then can be sold or taken public," said Ira Cohen, managing director at Signal Hill Updata, of New York, NY, a banker who has had dealings with Novell in the past.

After the announcement of the deal Monday, Attachmate said it would run the company as two business units: Novell and SUSE.

The private equity firm behind the Attachmate-Novell deal would likely see more interest from would-be buyers now that Novell's business is piecemeal and the Linux business is separate from Novell's multi-faceted product line.

"The Linux business is up in the air. That piece of Novell's business could be sold. It's a possibility," said Cohen. It's too early to predict but the private equity backers have deep pockets."

Novell has owned SUSE for more than five years but has failed to grow its Linux revenue base substantially, observers note. The Waltham, Mass. company has been rumored for sale numerous times over the past decade and has been officially on the block since spring. VMware was cited as a potential buyer in recent months.

It is difficult to envision Attachmate taking on Red Hat, Canonical Microsoft and Oracle in the platforms market.