Corel expects buyout offer

Struggling software maker Corel announced Thursday that it's likely to accept a buyout offer from one of the company's largest shareholders.

The company said in a statement that it continues to negotiate with San Francisco-based Vector Capital, which earlier this year bought the 22.89 million shares that Microsoft acquired when it made a sorely needed investment in Corel two years ago.

"In light of recent trading activity in Corel's common shares, Corel has announced that there is a high likelihood that it will shortly enter into a definitive agreement with Vector Capital for a transaction at a price per common share which will be below $1.10 per share and which the board of directors will recommend that shareholders approve," Corel said in the statement.

Corel shares were up 13 cents, or 12.5 percent, to $1.17 in late trading Thursday.

The shares have traded between 82 cents and $1.05 for the past month, at the low end of the price range that Vector and Corel agreed to when the companies began to look at a buyout in late March. At that time, Corel said that its board of directors had agreed to accept any Vector offer that valued Corel stock at $1.10 per share or higher, and that Vector had agreed not to make an offer below $1 per share. It also said that Vector agreed not to oppose any competing offer priced at $1.25 a share or higher.

Corel has been trading near cash value for much of the past year. Based on Thursday trading, the company had a total valuation of $107.49 million. According to Corel's most recent financial statement, it had cash and short-term investments worth $75.82 million and accounts receivable of $20 million at the end of 2002.

Corel, best known for its WordPerfect office software and graphics tools, has posted significant losses in the past few years and has gone through several rounds of layoffs. While the software maker made a number of high-profile customer wins for WordPerfect last year, analysts have said the deals are unlikely to help Corel's bottom line. Instead, the company has promoted a comeback strategy based on tools that add XML (Extensible Markup Language) functions to common types of documents.

Any acquisition would have to be approved by shareholders. That could be a challenge, judging from comments made during Corel's annual meeting last April, during which a number of investors complained that the proposed deals severely undervalued the company.