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 [email protected]; he does not own securities in the companies he covers.

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