Corel puts itself up for auction

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Corel puts itself up for auction

Software vendor Corel has announced that it is talking to two venture capital firms about a possible takeover of the company.

Vector CC Holdings recently bought 22.89 million shares of Corel previously held by Microsoft, representing about 20% of Corel's share capital. Corel's board has signed an agreement to accept any Vector offer for the outstanding shares in Corel which values its stock at more than $1.10 (70p) per share.

Corel, based in Ottawa, Canada, has also asked investment bank CIBC World Markets to sound out other possible buyers. A clause in Corel's agreement with Vector states that Vector will not oppose an outside bid which values Corel shares at more than $1.25 (79p). CIBC World Markets will immediately begin asking for takeover proposals from outside parties.

Corel shares jumped 24% on the Nasdaq exchange yesterday to close at 92 cents per share.

If a buyer is found, it will spell the end of the independent existence of one of the PC industry's longest-lived companies. Founded in 1985 by Michael Cowpland, Corel helped kickstart the PC graphics market with its CorelDraw product, released in 1989.

Corel widened its range by buying WordPerfect in 1996 to give itself a competitor to Microsoft in the word processing market. Many analysts have pinpointed that decision as the beginning of Corel's long slide.

In 1998, Corel made a strategic move to support the Linux operating system. Although at that time it had 35 million users of WordPerfect and 15 million users of CorelDraw, the company was unable to build momentum behind its Linux push.

In February 2000, Corel announced a $2.4bn (£1.5bn) merger with software tools supplier Borland Software, but the merger was called off three months later as Corel continued to struggle financially and its stock price plunged. Cowpland resigned as president chief executive officer and chairman in August 2000.

Later that year came the deal with Microsoft, which invested $135m (£85m). When it sold these shares recently to Vector the value had fallen by 90%.

In 2001 Corel sought to abandon its Linux business and focus instead on XML (Extensible Markup Language) technology. Its Linux division was spun off to become Xandros, which has recently released its first Linux distribution.

Over the following year, Corel began to embed XML capabilities into WordPerfect and its Smart Graphics Studio presentation software.

Throughout all the company's difficulties, CorelDraw, now in version 11, has remained a successful flagship product for the company.


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