Novell Agrees to Sell WordPerfect, Other Applications to Corel Corp.
TORONTO — Novell Inc. said Wednesday that it has agreed to sell WordPerfect and a host of other software applications to Canada’s Corel Corp. for $197 million--about a quarter of what it paid for the assets 1 1/2 years ago.
The deal would make graphics software maker Corel the second-largest independent vendor of word-processing and office software, but it would also put the small Ottawa company in direct competition with Microsoft Corp.
Analysts worry that Corel will fall into the same trap Novell did when it bought WordPerfect, PerfectOffice and QuattroPro (a spreadsheet program). “They’re trying to stop the hemorrhaging of what was once a great product but is now a moribund one,” said Richard Piotrowski, analyst at Levesque Beaubien Geoffrion.
Novell would receive 9.95 million Corel shares, representing a 20% stake, and $10.75 million in cash in return for giving up WordPerfect--once the top-selling word-processing program--QuattroPro and PerfectOffice.
Corel would also pay $70 million to license Novell software during the next five years and give Novell a seat on its board.
Novell shares rose $1 to $13.50 in trading of 20.9 million shares, making it the most active U.S. stock Wednesday. Corel shares gained 81.25 cents to $11.375. Both trade on Nasdaq.
Orem, Utah-based Novell paid $855 million for WordPerfect in June 1994, only to see the word processor bow to Microsoft’s Word. QuattroPro, bought the same month from Borland International Inc. for $145 million, has lagged behind Microsoft’s Excel.
Corel will license and offer Novell’s Envoy publishing program and GroupWise, which lets companies exchange material among offices and competes with Lotus Notes. Notes is owned by International Business Machines Corp.
“We are very enthusiastic about the fit of these products within Corel’s business,” said Michael Cowpland, Corel’s chief executive.
Some analysts said Corel might not have the resources needed to make WordPerfect successful.
The companies said they expect the agreements to close within 30 days, subject to U.S. government approval under the Hart-Scott-Rodino antitrust act.
Shareholder approval is not required by either company.
