Corel acquisition by Vector opposed by stockholder group

A group of Corel Corp. shareholders calling themselves Corel Rescue have banded together, attempting to thwart the acquisition of the Ottawa-based company by Vector CC Holdings LLC.

Corel Rescue is urging stockholders to vote “no” when they go to the polls tomorrow in Toronto to determine whether the Vector will buy Corel for US$97.5 million or US$1.05 per share. Corel signed the acquisition agreement on June 6.

“We have serious concerns as to why the company is even for sale at this point,” said Glenn Bruneau, a spokesperson for Corel Rescue in Ottawa. “They have $US75 million in the bank, they have no debt, and they’ve basically been maintaining an even balance the past few quarters and promising that going forward.”

However, Corel maintains it is acting in the best interest of shareholders and says the proposal Vector put forward was unanimously recommended by its board of directors despite Corel Rescue’s contention that Corel could remain independent or get shareholders a better price.

“Corel did a lot of things when this Vector cap was announced that indicated it was trying to find a better price for itself, but no one has emerged,” said Warren Shiau, software analyst at IDC Canada Ltd. in Toronto. “There has been plenty of time since Vector’s interest was announced and no one has come forward to buy Corel. So where would the shareholders be getting a better price?”

Shiau said it might be possible for Corel to sustain profitability if it divested all areas of its business except for the graphics arena, where the company is profitable. But he said that given the current situation it is probably best that Corel be taken off the public market where it does not have to meet quarterly profit goals. Instead, it should welcome an investor, such as San Francisco-based Vector, who is ready to invest in the turnaround of the business.

Corel noted it got the best price for the company it could. Anne Vis, Corel’s senior communications manager, corporate affairs said the board only recommended the offer after a thorough analysis of Corel’s historical operating results, its financial condition and its prospects, as well as market conditions, trends and future prospects of the industry.

Vis said when Corel first publicly announced negotiations with Vector the offer represented a 42 per cent premium over the value of the stock at the time.

“The proposal that was put forward by Vector was reviewed by CIBC World Markets and was determined to be fair from a financial point of view,” she explained. “There was a second review done – a formal evaluation of the issued and outstanding common shares that was conducted May 31 and it was prepared for the board of directors by KPMG which valued our common shares at a range between a US$1 and US$1.08.”

So far Corel Rescue has managed to gather support from about 1,000 investors, accounting for about 10 million shares, only a tenth of the total number of voting shares. In order for the acquisition to be prevented, votes against the acquisition must add up to one-third of total votes cast.

However, the acquisition still has to be approved by the Ontario Superior Court, where shareholders will have the opportunity to voice their concerns on Wednesday.

For more information about Corel Rescue visit Corel Corp. is online at

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