Software vendor Corel is talking to two venture capital firms about a possible take over of the company, it announced in a statement Monday.
Vector CC Holdings LLC recently bought 22.89 million shares of Corel previously held by Microsoft, representing around 20 percent 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 Corel stock at higher than US$1.10 per share.
Corel, based in Ottawa, Canada, has also engaged 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 above $1.25. CIBC World Markets will immediately begin asking for takeover proposals from outside parties, Corel said in the statement.
Corel shares jumped 24 percent on the Nasdaq exchange Monday to close at $0.92.
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.
In 1996, Corel widened its range by buying WordPerfect 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, readying its own user-friendly distribution. Although Corel at that time had 35 million users of WordPerfect and 15 million users of Corel Draw, the company was unable to leverage the user base to build momentum behind its Linux push.
In February 2000, Corel announced a $2.4 billion merger with software tools vendor Borland Software, but the merger was called off in May of that year as Corel continued to struggle financially and its stock price plunged. In August, Cowpland resigned as president CEO and chairman.
In 2000 came the deal with Microsoft, which paid $5.62 per Corel share in an investment worth a total of $135 million. It sold those shares recently to Vector for $0.56, a 90 percent fall in value.
In 2001 Corel sought to abandon its Linux business and focus instead on XML (Extensible Markup Language) technology. Its Linux division was spun off in August of that year to become Xandros Corp., 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, Corel Draw, now in version 11, has remained a successful flagship product for the company.