The acquisition of SilverStream will extend Novell's offerings, enabling it to help enterprises deploy advanced Web applications.
A move into the Web services market will add a third prong to Novell's one Net plans besides its Cambridge Technology Partners consulting division and the cross-platform infrastructure provided by its security and directory technologies.
"Today's announcement moves us firmly into the category of major player in Web services," Novell president and chief executive Jack Messman said.
SilverStream executives also saw the proposed deal as a major coup for their company.
"This takes SilverStream to a new level we would not be able to reach on our own," said SilverStream president and chief executive David Litwack.
Both boards of directors have unanimously approved the deal, and SilverStream shareholders that hold 20.33% of the company's shares have agreed to tender their shares, Novell said. The deal requires the approval of the holders of 90% of the shares, and still has to clear the usual regulatory approvals, it said. If shareholders support it, the deal could be concluded in July.
Novell plans to rebrand SilverStream's eXtend software line as its own and Litwack will become a senior vice-president of Novell if the buy out is successful.
SilverStream's technology, particularly its Web services creation and deployment tool eXtend Workbench, gives Novell the kind of application development tools that will help drive the company's Web services strategy, according to analysts.
"It's a powerful set of development tools that tie together Web services and existing systems, giving companies a great return on their assets investments," said James Governor, industry analyst at Illuminata in London.
Governor praised eXtend Workbench's ability to wrap AS/400 and mainframe systems for use with Java and Web services, as well as its XML transformation functionality.
"Novell doesn't want to get into the business of selling a "rip and replace" solution, given its huge installed base," said Governor. "SilverStream's products allow them to integrate."
Novell emphasised that Web services is a nascent market, in which open standards and integration are key. One big advantage for Novell under the deal is that the eXtend technology is built on the J2EE standard (Java 2 Enterprise Edition), which allows companies to build applications that run on any platform, company executives said.
Messman said he does not expect any significant number of redundancies if the deal goes through.