Lotus Development Corp. and Provo-based software innovator Novell Inc. called off their planned $1.5 billion merger Saturday after negotiations fell apart over control of the new board of directors, a spokeswoman said.

Lotus stunned the computer industry April 6 when it announced plans to buy its Utah networking counterpart. Analysts viewed the merger of equals as a bid to take on the industry giant, Microsoft Corp."Late last (Friday) night it fell apart, and it didn't look like it would get any better," Lotus spokeswoman Heidi Sinclair said.

Novell officials refused to comment on the nixed deal Saturday, saying they would respond to questions on Monday.

Delance Squire, former chair of the Utah Valley Economic Development Association and former mayor of Orem, said he doesn't think the called-off merger will affect Utah Valley's economy.

"I feel very comfortable having Novell flying their own kite," he said. "They've been one of our two shooting stars in the valley," with the other being WordPerfect in Orem.

Squire wasn't sure what the merger would have accomplished, but, he said, "I think they've done very well on their own without a merger. They've been a great company here in the valley."

"We are disappointed that we have had to break off negotiations; however, in the due diligence process we discovered that the implementation issues associated with the merger were too great," Jim Manzi, president and CEO of Lotus, said in a written statement released Saturday.

Manzi said he expects his firm's business would be "unaffected" by the change in plans.

"Our direction remains unchanged, focusing on our cross-platform strategy and our leadership in networked and stand-alone applications," he said.

Under the letter of intent signed April 5, Lotus, which is based in Cambridge, Mass., was to issue 1.19 shares of common stock for each share of Novell common stock, or approximately 41.6 common shares, a deal worth an estimated $1.5 billion.

The firms decided to avoid secret talks, opting instead to ratify terms and review each other's records as openly as possible, Manzi said.

The agreement broke down in discussions over control of the new firm, which would have been called Lotus-Novell, Sinclair said.

"We had agreed that the board of directors would include four people from our side and three from Novell's side. Late last night, they said they wanted four on the board so it would be even," Sinclair said.

"When you get into that kind of a situation, you get into polarization and no decisions can be made easily. We had made a lot of what we thought were important steps toward ensuring that Novell had good visibility within this merger.

"We were ready to make (Novell Chairman) Ray Noorda the chairman and combine the names of the company, but Ray would still report to Jim, and we needed to be in control of the board," Sinclair said.

Novell produces software used to link computers in networks for business-related tasks. The company stood to gain access to Lotus' worldwide market.

Novell had also been expected to give bolster to Lotus' recent focus on service, support and consulting services in an effort to shed its reputation as a one-product company.

Lotus had $556 million in revenue for fiscal year 1989, and Novell had $422 million in revenue. Lotus, under the original agreement, was to swap 1.91931 shares of Lotus common stock for each share of Novell common stock. Lotus would have issued about 41.6 million new shares to finalize the deal, which was due to be completed in July, subject to approval by both companies' boards of directors and stockholders.

Analysts said the planned merger would have been worth $2.8 billion.