Novell Inc. has signed an agreement to acquire Excelan Inc., San Jose, Calif., in a stock swap arrangement that would create a company with combined annual sales of $347 million.

Both firms are prominent suppliers of network computing solutions. Under the agreement, pending approval by Excelan stockholders and regulators, Excelan will become a wholly owned subsidiary of Novell.The merger agreement have been approved by the boards of directors of each company and certain Excelan stockholders, including each of its directors, have signed agreements to vote their shares in favor of the merger, which is expected to be completed by the end of June.

The agreement specifies that existing shares of Excelan common stock be exchanged for newly issued shares of Novell common stock, with Excelan stockholders receiving a minimum of 0.475 and a maximum of 0.6 shares of Novell common stock for every share of Excelan stock held.

Raymond J. Noorda will continue as president of Novell. Kanwal S. Rekhi, Excelan president and chief executive vice president of Novell and will remain responsible for Excelan operations. He will also be nominated for election as a director of Novell Inc.