By William Fellows
Corel Corp is paying the equivalent of $10.3m in cash and stock for the assets of clipart specialist GraphicCorp which Corel CEO Michael Cowpland described as the de facto OEM supplier of corporate images. Corel is trying to turn its website into a portal and will add GraphicCorp content to it. GraphicCorp made $2m on revenue of $10m in 1998. Corel will pay $4m in cash and 1 million Corel shares. It pays $1.5m cash now, $1.5m in June and the balance in September. If Corel’s stock falls below $6.30 by the completion of the transaction, Corel will make up the difference. Corel says the revenue stream in acquires and the ending of its royalty payments to GraphicCorp means the acquisition should begin to provide a payback based upon on the valuation in two years’ time.
Corel, already the fourth largest developer of consumer graphics and clip art packages, will pick up GraphicCorp’s extensive customer base and third party relationships. Its content is licensed by 61% of the top 100 consumer graphics and clipart collections in the retail market. Corel will initially offer 10,000 free vector images and 100,000 free web images and is developing a full-blown subscription model for the clipart which it will unveil on May 13 at E3, the Electronic Entertainment Expo in Las Vegas. Its chief rival, ArtToday offers a $30 subscription service. GraphicCorp has 150 designers worldwide. Based in Los Angeles, California, GraphicCorp is trade name of the IA users Club Inc of Los Angeles. Corel says it also licensing Microsoft Corp’s VBA Visual Basic programming language. It says its WordPerfect Office2000 product and a new version of CorelDraw will ship early next month.
