Only six months after snapping up virtualization specialist Parallels, Canadian software company Corel is itself getting acquired. TechCrunch has learned and confirmed with multiple sources that private equity giant KKR has closed a deal to buy the company from Vector Capital, which has owned some or all of Corel since 2003.
KKR’s interest in Corel was first rumored in May, when PE Hub reported the two were in talks for a sale valued at over $ 1 billion. At the time, representatives of Corel declined to comment, although our sources inside the company indicated that the reports were not inaccurate.
Fast forward to today, and both KKR and and a spokesperson for Parallels/Corel declined to comment. But, we now have a copy of the memo provided by an internal source that has been sent out to staff announcing that the deal has indeed closed, and that Corel is now officially part of the KKR family of companies.
According to the memo, KKR is very optimistic about Corel’s prospects. It plans to give Corel an “infusion of capital” to accelerate its growth, which will go into two areas. First will be expanding operations for the existing business: Corel is the company behind a number of longstanding software brands including WordPerfect, Corel Draw, WinZip, PaintShop Pro. Second will be making acquisitions (and the sheer proliferation of promising startups in the last decade dedicated to all variety of apps and other software that may have found it a challenge to scale means Corel could have rich pickings).
There are no layoffs planned as part of the deal, and the official announcement had been planned to go out next week, but now looks like it may be moved up to tomorrow (Wednesday).
Vector and Corel itself have never publicly disclosed much on user numbers or financials, but Vector has described the company as “highly profitable”, with dividends of over $ 300 million to date. The memo we’ve seen notes that Corel (including Parallels) has millions of customers across its various software platforms and apps.
The acquisition of Corel by KKR marks another chapter in the company’s long corporate history.
Founded in the 1980s — when personal computers were just starting to enter the mainstream but well before we had anything like the internet (not to mention the world of cloud-based apps) that we know today — Corel once positioned itself as a potential competitor to Microsoft in the software wars.
When Corel purchased WordPerfect from Novel in 1996, Corel founder Michael Cowpland viewed the software package as an integral part of that rivalry, describing it as the Pepsi to Microsoft’s Coke — that is, Word.
Microsoft proved the mightier of the two, and it even eventually signed a partnership with Corel that saw it investing in the company: a sell out, as one disappointed Canadian journalist described it at the time. The two have also sparred over patents.
Corel, which went public early in its life, got battered in the first dot-com bust (which was not helped by an insider trading scandal that led to Cowpland’s departure). Vector stepped in and took it private in 2003.
After restructuring the company, Vector listed Corel again in 2006. But, amid another recession that again hit Corel hard, it once more took it private in 2010. In the intervening years, Corel has been focused on modernising its offerings, bringing in e-commerce, direct downloads, subscriptions, and acquisitions to bring the company’s products and wider business closer to how consumers and workers use computers today.
Parallels was a part of that strategy: its products help people work seamlessly across multiple platforms, letting employees (and IT managers) run a unified workflow regardless of the device or operating system, with Parallels providing support for Windows, Mac, iOS, Android, Chromebook, Linux, Raspberry Pi and cloud — a timely offering in the current, fragmented IT market.
If the $ 1 billion+ figure is accurate, that strategy seems to have worked: across the two times that Vector took Corel private, it never paid more than $ 124 million for the company (the second time, as its stock was tanking, it paid just $ 30 million).