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Quark Aims to Purchase Adobe

If the acquisition takes place, PageMaker and FrameMaker products may be sold off; Adobe is publicly resistant.

By Clare Haney, PCWorld   

Yesterday evening Quark disclosed that it hoped to buy Adobe at a cash price in excess of the vendor's current market value, the company said. Quark had earlier published the contents of a trio of letters--two from Quark and one from Adobe--that outlined such a plan.

In the first letter, dated August 18, Quark CEO Fred Ebrahimi told John Warnock, Adobe cochair and CEO, and Charles Geschke, Adobe cochairman and president, of Quark's proposal, and requested an August 24 meeting with Adobe management. In the letter, Ebrahimi described the Quark proposal as a "very exciting and compelling business opportunity," adding, "If we are to be successful, speed is of the essence."

However, the deal doesn't come without strings. Ebrahimi said in the letter that due to certain unspecified regulatory issues, a potential Quark-Adobe combo would need to divest itself of Adobe's K-2 and PageMaker desktop publishing software, selling off the products to third-party buyers. K-2 is the code name for an upcoming PageMaker replacement product.

Quark would also consider offloading Adobe's FrameMaker as well, should that help speed regulatory approval of the deal, Ebrahimi added in the letter.

Privately held Quark specializes in publishing software. Newspapers and magazines widely use its flagship product, QuarkXPress, for page layout; QuarkXPress is similar to Adobe's PageMaker and K-2. Quark evidently fears that given the overlap between their respective products, a union between the two companies could attract the attention of antitrust watchdogs.

While stressing Quark's intention to engage in "direct friendly discussions" with Adobe, Ebrahimi added that his company chose to publicize the discussions to plead its case. "Although we reserve the right to proceed with an offer directly to your stockholders, we strongly prefer to negotiate a transaction supported by the Adobe board," Ebrahimi said in the letter.

He added that Quark considers Adobe "obligated to enter into a dialogue with us regarding the combination of Quark and Adobe before it can enter into any alternative transaction or agree to any lockups, breakup fees, or impediments to a transaction with Quark."

Adobe didn't agree. "Quark has itself acknowledged the significant anticompetitive effects of any transaction, which Adobe believes would be harmful to its customers," the company said in its statement issued late Tuesday.