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August 27, 1998


By CBR Staff Writer

The stand off between rival desk top publishing houses, Adobe Systems Inc and Quark Inc, continued through Thursday, with Quark insisting that its offer to acquire Adobe is more than just posturing, while for its part, Adobe is still refusing even to talk about a merger. The general mood among industry watchers is one of mild amusement, followed swiftly by ruminations on the amount of attention the announcement has generated for Quark. This free press, according to the majority, is the real reason behind Tuesday’s surprise announcement. Quark is simply trying to rattle its rival while generating interest in a possible IPO of its own, the argument goes. Reservations about the validity of the offer stem from several factors. First, Quark has yet to declare the price it will pay to Adobe’s stockholders. Susan Friedman, a spokesperson from Quark’s Corporate Development department, insisted on Thursday that the price could not be fixed before a meeting had been held between Quark’s and Adobe’s management. Adobe’s board does have a duty to consider the potential benefits to its shareholders of such an offer, but without a price, this duty is easily set aside. Second, Quark has failed to nominate an investment bank to advise it. Again, a spokesperson for Quark told ComputerWire on Thursday that the company was very serious about the deal and that the company was in discussion on this very matter. Quark’s web site proclaims that We will announce who our financial advisor is for this project at a more appropriate time. Considering the ridicule Quark is enduring, right now would seem highly appropriate; if of course the proposal is genuine. Third, there are doubts surrounding Quark’s ability to raise the $1bn necessary to launch a cash bid for a company estimated to be four times its size (in revenue terms). Quark, being a privately held company, refuses to divulge any of its figures, leaving the world guessing at its ability to raise the cash. But the company dipped its toe into the world of quarterly reporting with a press release on Wednesday that claimed 26% increase in revenues for the first half of 1998. However, no actual revenue figures were disclosed. Again, Quark stopped just short of offering meaningful information to substantiate a genuine acquisition bid. Quark also insisted that the release of its content-free half year results, just one day after publicly launching its Adobe bid, was pure coincidence. And so Adobe refuses to grace Quark’s offer with a meeting of minds, while Quark maintains that it can go no further until such a meeting is ordained. Press lunch anyone?

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