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We had already commented on hoe the merger offer for Corel Corp. (NASDAQ: CREL) from majority owner Vector Capital might be the strangest merger paths of this decade. The strange can always get stranger. Vector Capital had already raised its buyout price for the software company.
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It has become commonplace to see initial public offerings from earlier private equity holdings that were once public and taken private. Yet it is very odd to see a company get acquired in a go-private deal to ultimately be followed by a re-IPO and then ultimately see a go-private transaction come its way yet again. But that is what we are seeing as a possibility, again, in Corel Corporation (NASDAQ: CORL).
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These are some of the top pre-market analyst downgrades and cautious calls we have seen this Thursday morning:
Jon C. Ogg
December 4, 2008
Aladdin Knowledge Systems (NASDAQ: ALDN) has confirmed that it received a confidential and unsolicited proposal from private equity firm Vector Capital to acquire the company. The company notes that Vector’s proposal includes a potential alternative transaction with Vector’s purchase of Aladdin’s DRM business…. "potentially combined with a repurchase by Aladdin of the shares of Aladdin purchased by Vector Capital, and the sale by SafeNet, Inc., a Vector affiliate, of its authentication business to Aladdin." What is very interesting is that while this would be a small deal, you can see below how this deal will come under question by many just as fast as it was announced.
Corel Corporation may be under some pressure Monday as we get closer to the open this Monday morning. The software maker’s acquisition offer from Corel Holdings L.P., which owns 69% of Corel, has been withdrawn.
This buyout was for the 31% of the company that Corel Holdings, L.P. did not already own. There were already some questions as to whether or not this buyout was 1) going to become effective and 2) actually get approved by shareholders. The buyout for the remaining shares was going to be at $11.00 per share, yet shares closed at $9.44 on Friday and the 52-week trading range is $6.94 to $13.95.
Corel Corp. (NASDAQ:CREL) has announced today it has received an unsolicited proposal from Corel Holdings, L.P., which is controlled by an affiliate of Vector Capital Corporation, the holder of 69% of Corel’s outstanding common shares.
The Vector affiliate has proposed to make an offer to acquire all of Corel’s outstanding shares that it currently does not hold at a price of $11.00 cash per share in US Dollars. We would note that before the stock was halted, shares were trading at $10.80 and the stock has a 52-week trading range of $6.94 to $14.37. Vector has stipulated that the offer would be conditional upon satisfactory confirmatory due diligence and Corel’s existing credit facility remaining in place following the consummation of any transaction, among other things.
Corel’s Board of Directors has formed a Special Committee of independent members of the Board consisting of Ian Giffen, Steven Cohen and Daniel Ciporin. The group will assist in evaluating and responding to the proposal and other related strategic considerations. Corel said it will not provide further comments at this time but will provide updates as further information becomes available. There is also the pre-packaged statement that there can be no assurance that a transaction will be completed or, if completed, of its terms, price or timing.
We frequently cover such issues around private offerings, management buyouts, private equity and more in our open email distribution list where we preview certain issues that will be in our twice-monthly Special Situation newsletter for our our subscribers.
Corel is a leading developer of graphics productivity and digital media software whose offerings include WordPerfect, CorelDraw, Painter, and more. We’d also note that Vector Capital recently had attempted to acquire Captaris, Inc. (NASDAQ: CAPA). That was one we covered as having not gone through today.
If you look above at the buyout offer versus where this one has traded, it doesn’t look like this deal is an assured slam dunk that will be approved. That answer won’t be known until the firm makes a response.
Jon C. Ogg
March 28, 2008
Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.
Corel Corporation (NASDAQ:CREL) has released earnings and Non-GAAP EPS $0.31 & Revenues in the third quarter were $60.4 million, compared to estimates of $0.30 & $61.1 million. The company’s tax charges and other charges generated a loss on a GAAP basis. Here is the GUIDANCE for next quarter, which is also the year end:
Unfortunately, soft top-line numbers in software companies rarely excite Wall Street; and weak revenues and earnings guidance ahead in software companies turn Wall Street the other way. Graphics & Productivity products experienced double digit year over year growth for CorelDraw Graphics Suite, WinZip, Painter, Designer and iGrafx. But that was then.
This morning after reviewing the numbers it looked like this was so cheap that someone would see a "value stock" that looked cheap. But in technology most stocks that appear to be "Value Stocks" end up being "Value Traps" that are exactly what they sound like.
The forward fiscal numbers still make the company sound cheap with $1.24 to $1.33 EPS & $244 to $248 million in revenues when you compare this to a $327 million market cap and $13.11 stock price. But if it it is facing shortfalls over and over ahead, then this will be a stock that looks cheap and either stays cheap or gets even cheaper.
This is a thin volume cult stock, but shares appear to have traded down about $4.5% in after-hours trading to $12.50; and the range is $11.90 to $14.51 over the last 52-weeks. Its previous highs were up around $16.00 since coming back out as a public company in May 2006. There might be some downgrades in the morning, barring anything not known.
…..And to think Corel’s WordPerfect was once thought of as a "Office Suite" threat to a cardboard and plastic software company run by some guy named Bill Gates.
Jon C. Ogg
October 10, 2007
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