Vector Capital Completes Corel Purchase

The struggling applications software vendor has been acquired by Vector Capital Group for $1.05 per share. Corel shares will stop trading on the NASDAQ Friday and on the Toronto Stock Exchange next Tuesday, the company said.

Last week, Corel got the go-ahead to complete the deal from the Ontario Superior Court of Justice following a hearing on August 21. Some Corel shareholders, the majority of which were needed to approve this deal, squawked that Vector got a sweetheart deal. Vector is paying out about $97.5 million for the company. Factoring in the Corel shares it already owned, Vector paid a total of about $124 million.

"Vector is a committed and enthusiastic partner who will work with Corel to build customer relationships and capitalize on the Company's potential," Corel president and CEO Derek Burney said in a prepared statement. "We look forward to a successful future for Corel as we devote even greater focus and energy to delivering productive software solutions to our customers and partners worldwide."

The company will go private.

Corel, basically the only software company still fielding a Windows competitor to the Microsoft Office juggernaut, has been struggling. Last year it cut some high-profile bundling deals to put its WordPerfect Office on select Dell, Gateway, and Hewlett-Packard PCs selling through retail. But Microsoft Office remains the undisputed king of desktop productivity applications.

In October 2000, Microsoft took a $135 million stake in Corel, which thereafter de-emphasized and then spun off its Linux product plans into a Xandros a separate company. Pundits suspected a quid pro quo behind that deal. Microsoft has been fighting the upstart Linux open source crowd as a major threat to its Windows power base. San Francisco-based Vector bought out Microsoft's stake in Corel last spring.