uark intensifies bid to buy Adobe
Software The takeover war could leave one domineering player.
uark has reiterated its desire to absorb rival publishing specialist developer Adobe, despite receiving a knock-back by the company last week over its takeover bid.
In a series of letters exchanged between the two companies, Fred Ebrahimi, chief executive of Quark, stated his intention to put forward a proposal to acquire 'all or a significant portion of Adobe's outstanding common stock'.
However, three days later on 21 August, both John Warnock, chief executive and Charles Geschke, chairman and president of Adobe, replied rejecting the offer.
On 26 August, Adobe confirmed in a prepared statement that it had: 'Received unsolicited letters from Quark requesting both companies engage in discussions concerning a business combination.'
Quark, however, reiterated its intent to pursue its interest in Adobe, which could result in a hostile bid through the stock market and over the heads of the Adobe board and shareholders.
Adobe, which is four times bigger than its pursuer, is in a difficult financial position with its shares down to a 52-week low at less than half its March price of more than $50.
It has also warned it will lay off 10 per cent of its workforce and is expected to produce reduced sales of about $220 million, compared with $230 million last year.
Compared to Adobe, however, Quark's estimated revenues - the company is privately held - was placed at $200 million, while its rival company had $912 million in sales for its last fiscal year.
Quark said last week that its revenue for the first six months was at an all time high and showed a 26 per cent increase over the past year.
Despite Adobe's financial insecurity, Neil Wright, marketing manager for scanner and Mac specialist distributor IMC, said he was surprised by the bid.
'My initial reaction was that I thought it was a joke. Quark is basically a one product company and I was wondering whether it could afford to acquire Adobe,' he added.
No price has been mentioned as yet, fuelling rumours that Quark is trying to destabilise the share price further, making the company more attractive for a takeover bid.
'The letters failed to state any material terms that would constitute a firm and bona fide offer including price,' the Adobe statement added.
In the letter dated 18 August, Quark also stated that if it is successful in its bid, it would divest products in Adobe's portfolio including Pagemaker, K2 and FrameMaker packages.
The combination of QuarkXPress and PhotoShop would also mean Quark would virtually control the pre-press market.
'QuarkXPress has the lion's share of the pre-press market but Quark has been unsuccessful in other markets,' Wright argued.
'Adobe has managed to gain massive market share with Photoshop by bundling it with scanners and is raking in royalties on the Postscript technology.
You can see why it would be an attractive target for Quark,' he added.