Given that it was rejecting an offer of $200m from Bain Capital Inc of Boston, Novell Inc had to dream up some pretty ingenious ways of making the price to be paid by Corel Corp of Ottawa for its Wordperfect business at least come close. It managed to get it to about $197m – most of it in shares – when a licensing deal is thrown in. For that, Corel gets the Wordperfect word processor, PerfectOffice application suite and QuattroPro spreadsheet and related software. The deal is claimed to make Corel, best known for its CorelDraw graphics package, the second- largest independent vendor of personal productivity software for personal computers. Novell gets a mere $10.75m cash, the rest comes as 9.95m new Corel shares worth some $116m, for a substantial part of a business for which it paid $855m in June 1994. Corel is expected to pay an estimated $70m in future royalty payments – without which the deal is worth just $127m. Novell is keeping the GroupWise client software, Envoy electronic publishing software and other technologies it acquired from WordPefect, and is licensing them to Corel for the minimum royalty of $70m over the next five years. Novell will have about 20% of Corel and gets a seat on the board. Corel will lease facilities from Novell and hire certain Novell employees engaged in the continued development and support of the application products, but expects the deal to create a startling 1,500 jobs in Canada this year. Chief executive Michael Cowpland said he sees sales for Corel of $500m this fiscal with per share earnings of at least $1.00. He believes WordPerfect will be profitable right out of the gate.
