Corel's Questionable Buyout Evaporates (CREL)

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  The software maker’s acquisition offer from Corel Holdings L.P., which owns 69% of Corel, has been withdrawn.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.

The buyout group has withdrawn this and will allow the company topursue strategic alternatives to create value.  As shares were at $9.44on Friday, this deal seems suspect or less trusted than othermanagement buyouts.

This is supposedly on the grounds that it will "facilitate pursuit byCorel of alternatives for maximizing value for all of Corel’sshareholders."  Whether or not you believe that reasoning is up to you. If you look over our initial analysis when the offer was made, we noted that it didn’t look like this deal was an assured slam dunk that would be approved.

So far no shares have traded hands pre-market.  The average volume isnow only about 14,000 shares as this has been a pending merger for sometime.  We’ll be looking for more volume today.

Jon C. Ogg
August 18, 2008