Corel Goes Private

prostoalex writes "Ottawa-based Corel, known for its CorelDRAW, WordPerfect, Painter and Bryce products, has been acquired by Vector Capital Corp. for $124 mln. with the intent to get de-listed from Nasdaq and Toronto stock markets and go private. 80% of shareholders approved the deal, according to the story. At certain points of its corporate history Corel was a Linux vendor and even partially owned by Microsoft. Microsoft paid $135M for 25% of the shares, so Vector Capital paying $124M for 100% stake looks like a pretty good deal." It's been over a month since this was first announced, but it's actually come to pass now.

Comments

Re:Corel Draw

[Anonymous Coward]

http://sodipodi.sourceforge.net

sodipodi needs some programmer love!

Re:Does anyone see IP issues inthe future?

[tsa]

The difference with SCO is that Corel has had a positive attitude towards linux. They contributed a lot to the wine project while developing Corel Draw and WP for Linux. I would be very surprised if they turn around 180 degrees all of a sudden.

Re:Does anyone see IP issues inthe future?

[Daniel Dvorkin]

What is that attitude of Vector Capital, for whom Corel is simply now an owned brand?

Good question. Here's a partial answer: a list of software companies owned by Vector. The majority of them seem to be the types of names you don't recognize unless you work in a specific field -- "enterprise software" tailored to a very specific business application. And like it or not, that usually means Windows these days. I'd love to see more Linux and OS X releases from Corel (I'd love an OS X - native WordPerfect) but I'm not terribly optimistic.

OTOH, "simply an owned brand" might be a bit harsh -- I get the impression that VC (nice abbreviation, huh?) is basically a holding company and doesn't necessarily run the businesses they own. So who knows. Maybe given some money to play with and some space to breathe, the forward thinkers at Corel (there must be some left, right?) can come up with some good stuff.

"It's a steal"

[smallpaul]

This deal is so sweet for Vector that it is barely legal. $124M is nothing for a company with annual revenues of $127M and 70M in cash. This is also the most illogical time to sell the company. The market is in the toilet, Corel shares are at an all-time low, Corel has plenty of cash in the bank, Corel has new product lines that have not been given time to prove themselves, etc. The whole thing looks very poorly thought out.

Re:"It's a steal"

[ortholattice]

I agree it's a terrible deal for the stockholders. For example, its price/sales ratio is only 0.76 (compared to say 4 for Amazon, 17.5 for Yahoo, 21.41 for Ebay). I bought 3700 shares on 8/29/02 at $1.04 expecting to hold them a long time and to appreciate considerably, since my research at that time indicated it was severely undervalued. Now I'm forced to sell, against my will, at $1.05 a share. So even though I'm making a $37.00 profit before commissions, I'm actually losing $39.98 - $37.00 = $2.98 after commissions are taken into account. At least I won't have to pay taxes.

Ironically even though the stockholders got screwed, they screwed themselves by voting for this, or more likely by not voting at all (I voted against it). Apparently it was 37.8 million in favor versus 8.1 million against; the rest of the 91 million shares didn't vote. Now of the 37.8 million in favor, 23 million were controlled by Vector, who is now laughing all the way to the bank. Moral: always vote your shares. You may think it won't make much difference, but this is what happened when everyone thought that way.

Statements made by Vector Capital in this article

[Kircle]

Does anyone have references to statements or whatever else by Vector Capital on their plans for Corel?

Interesting quotes from this article:

"At this point, nothing has been contemplated that would change [as a result of] this transaction," Alex Slusky, Vector Capital managing partner, said in an interview yesterday. "Current Corel management continues to run Corel."

[Slusky] believes Corel is going to be "very successful" if it doesn't have to worry about all the costs and complexities of maintaining its public status.

Re:Once bitten, twice shy.

[TeXMaster]

> Corel tried the Linux route, producing their own distribution and a few Linux native versions of their apps. That endeavour failed miserably and they abandonded the effort completey, similar to their plan to port all their apps to Java.

Corel's attempt at Linux were not successful by themselves, but the 'heirs' of Corel in the Linux world (i.e. Xandros) managed to turn it into a pretty effective product; at least for what I hear from people that have been trying the various distributions, Xandros is one of the easiest to install, most user friendly and it's rather complete too.

The most dangerous competitors for Corel now are precisely those in the open source world: for example, OpenOffice.org is in a good position to steal market from WordPerfect Office, even though Writer is not as good as WordPerfect and QuattroPro doesn't suffer from the size limitations that haunt Calc (or Excel).

Hurrah! WordPerfect's not Canadian-owned anymore!

[unfortunateson]

That sounds like a strange headline... but WP's Canadian ownership hsa been a thorn in the side of companies that have to deal with the Canadian government.

In a ploy to keep jobs in Canada, they require documents sent to them to be in WP format, versus the international standards of PDF for virtually every other country, or at least the MS Word standard used by virtually every major corporation.

As a specialist in electronic submissions for a pharmaceutical company, it will greatly reduce my workload if Canada stops requiring WordPerfect.

I have to go find the statistics, but I think that each time WordPerfect was sold (from WP Corp to Novell, to Corel, and now to VC), it was worth much much less.

Re:Corel Draw

[WindBourne]

yes. The reason is that vector is the company that originally supported the linux stuff. Hopefully, they will do it right this time. If they are smart, they will move all the graphics to Linux and then catch the rest. Why graphics? one word. Hollywood.

Re:Does anyone see IP issues inthe future?

[Dun Malg]

Good question. Here's a partial answer: a list of software companies owned by Vector.

Vector doesn't OWN those companies, they're in its PORTFOLIO. That means they own PART of those companies, i.e. they are investors. Now, they may or may not have a controlling interest, but OWN? No.

Re:Corel Draw

[Anonymous Coward]

Word around Ottawa is Corel's Linux department was completely dispursed a long time ago.

Corel would have to assemble a new team of Linux developers if they were ever to release a new Linux product. Not very likely.