RealTime IT News

Corel Shareholders Vote in Favor of Vector Buyout

Despite an eleventh hour attempt by a dissident shareholder group, shareholders overwhelmingly approved Corel's plan to be taken over by Vector Capital, a San Francisco-based venture capital firm.

Corel's management and board of directors recommended the deal to shareholders, before the voting on Wednesday. Eighty percent of shareholders voted in favor of the measure. Published reports called the vote "rancorous," as several dissident shareholders spoke up about their displeasure with the management and board's decision to go forward with Vector offer.

While Corel is best known for its WordPerfect word processing and CorelDraw graphics software packages, the company has struggled against its competitors.

The deal could close within the next few days. On Thursday, a Canadian court is expected to review the terms of the deal.

Vector offered Corel $1.05 for each share of the company, as recently as March the stock was trading at 74 cents.

What is not clear is whether Vector will change the top management of Corel, or perhaps make deeper job cuts. Corel has close to 730 employees, mostly based in Ottawa. The company has been posting significant losses and made several major job cuts over the past few years.

Corel's founder Michael Cowpland and a group of dissident shareholders known as the Corel Rescue team did not want the deal to be concluded. The current management and board of directors originally told shareholders they would recommend a bid of at least $1.10 a share, but later backpedaled and accepted Vector's $1.05 offer.

Corel's reputation became tainted, after Cowpland was forced to resign and charged in 1999 with three counts of violating securities law for trades conducted in 1997.

Vector now controls at least 20 percent of all Corel shares, making it the company's biggest shareholder. Corel is the latest addition to Vector's portfolio of technology companies, which now includes RealNetworks , Savi Technologies and LANDesk Software Inc. The closure of the takeover will complete the process of taking Corel private, and thus, removing the stock from both the Nasdaq and Toronto Stock Exchange.

If the court approves the deal, Corel Rescue has said it may file suit in Ontario Superior Court in Ottawa in its attempt to overturn the results of the shareholder vote.

At the shareholder vote in Ottawa on Wednesday, there are published reports of investors shouting at board members. The board defending its support of the Vector takeover offer said that its choices were vetted by both CIBC World Markets Inc. and KPMG.