Corel agrees to acquisition by Vector

Canadian software firm, Corel, has announced it has agreed to be acquired by US investment company Vector Capital for $US1.05 a share, a total of $US97.5 million.

Including convertible securities, the total estimated value of the deal is $US124 million, Corel said.

Pending approval of shareholders and the Canadian Court, Vector will acquire all of the outstanding common shares of Corel.

"We're satisfied that the proposal tabled by Vector is the best available for shareholders to maximise the value of their investment at this time," chairman of Corel’s board of directors, James Baillie, said.

Corel and Vector entered into a non-disclosure agreement to discuss acquisition terms in March immediately after Vector announced it was interested in acquiring Corel following its purchase of 19.9 percent of Corel’s shares from Microsoft, Baillie said.

At that time Corel had just been notified by the Nasdaq stock exchange that it was in danger of being delisted because its stock had fallen to $US0.70 per share, falling short of the minimum bid price, Baillie said.

Corel's headquarters is expected to remain in Ottawa and there are no lay-offs planned of Corel's 810 employees, 500 of whom are in Ottawa, Corel President and Chief Executive Officer, Derek Burney, said.

Corel, which makes software such as WordPerfect and CorelDraw, has been plagued with falling revenue for its mature products and less-than-expected revenue for its new enterprise-level products.

"I recognise that our new enterprise-oriented products and solutions, while showing early promise, are still a few years away from realising their full potential," Burney said. "In addition, it’s clear that Corel still has something to prove with its new enterprise customers and we need to regain some of the ground we’ve lost over the years among our retail customer base."

IDC Canada enterprise software analyst, Warren Shiau, said that the situation with Corel was in no way indicative of any negative trends in the Canadian IT market but was simply a result of Corel’s strategy of competing against Microsoft in desktop applications.

Corel did not possess enough of the corporate desktop market to make it a cash cow, he said.

"If Corel had stayed as a graphics company and maybe moved into stuff like XML later on, it probably would have been more profitable and probably would have ended up on its own," he said.

By going private, Corel would be able to spend more time developing its not-yet-mature products, Shiau said.

"Corel and Vector together, without the distraction of being a public company - and I think in Corel’s case it is a distraction - it will free up management time to actually work on the business instead of working (to meet numbers) every quarter," he said.

If shareholders and the court support the agreement, Corel expects the deal to be completed by the end of July. However, Corel can still back out of the agreement if a better one comes along, but it would be forced to pay Vector a termination fee of $2 million plus a portion of Vector’s expenses pertaining to the arrangement.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Rebecca Reid

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?