Microsoft Corp. has taken steps to sell its stake in Ottawa-based Corel Corp. in a move that may have been spurred by U.S. Department of Justice scrutiny.
Corel filed an S-3 form with the Securities and Exchange Commission Wednesday which would allow it to convert Microsoft’s 24 million Corel Series A shares into saleable common stock shares.
The Redmond, Wash.-based software juggernaut appears to be willing to take a loss on the investment. The company picked up the stake in Corel last October for $135 million, apparently looking for some help in making its .NET platform work with Linux. But Wednesday’s filing proposed a $2.5625 maximum offering price per share, meaning at most Microsoft would be able to recoup $61.5 million of its investment.
The conversion is only a step towards a sale. Microsoft may choose to sell all, part or none of the common shares.
“It doesn’t indicate one way or the other whether or not Microsoft is going to sell the shares,” said Jim Desler, a Microsoft spokesman.
While Microsoft was ostensibly seeking Corel’s aid with Linux, Corel also makes the WordPerfect suite which is in direct competition with Microsoft’s Office software. Because of the potential conflict, U.S. and Canadian regulators initiated a probe of the deal. By selling the stake, Microsoft may quash any speculation that it is secretly controlling Corel.
But Desler said Wednesday’s filing had nothing to do with the Justice Department’s probe. “That simply isn’t the case,” he said.
“This is based upon an agreement between Microsoft and Corel at the time of the deal.”
Desler also noted that the filing simply represents the price of the stock at the time of conversion. Once Microsoft holds the shares, they can either increase or decrease in value.
Corel Separately, Microsoft announced the availability of its Realty Desktop transaction management platform, a Web-based service for real estate professionals based on its HomeAdvisor technology. Last week, Microsoft began shopping its HomeAdvisor venture around to potential buyers. Launched a year ago, HomeAdvisor has underperformed and failed to keep up with industry leader, Homestore.com. shares were trading at $2.15 in early afternoon trading Thursday off an open of $2.21.
