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Quark says bid for Adobe rebuffed

Quark makes the offer public after being turned down by Adobe last week.

2 min read
Quark disclosed that last week it had proposed to purchase larger rival Adobe Systems, but Adobe dismissed the offer, which Quark described as a premium-priced cash bid.

Quark, the privately held maker of popular publishing software QuarkXPress, announced its initiative in conjunction with a renewed attempt to acquire the struggling San Jose-based company.

Adobe stock jumped today in early trading on the news of the attempted takeover, climbing more than 6 percent to 26.13. Yesterday, the company's share closed at 24.5625, very near its 52-week low and well below its early March price of more than $50.

"It is our desire to enter into direct friendly negotiations with Adobe. However, because of the response we have received to our August 18 letter, we have decided to publicly disclose our proposal," according to inter-company correspondence signed by Quark CEO Fred Ebrahimi and publicly released late yesterday.

Adobe, which confirmed receipt of unsolicited letters, countered with a prepared statement saying Quark had "failed to state any material terms that would constitute a firm and bona fide offer, including price." The statement also called into question the proposal's anticompetitive effects.

"Adobe is not interested in pursuing discussions as we continue to focus on the exciting opportunities available to our company, stockholders, employees, and customers," read Adobe's August 21 reply, released by Quark.

The move comes two weeks after Adobe said that it would cut up to 300 jobs this month, or 10 percent of its workforce, and that three of its top executives had resigned.

The biggest supplier of software for graphic artists also said it might report a loss for its third quarter. Previously, analysts had expected Adobe to report third-quarter earnings of 52 cents a share, according to First Call.

Adobe, which has posted lower earnings for the past two quarters, is now expected to show third-quarter revenues between $220 million and $225 million, compared with revenues of $230 million posted a year ago. The company will report its third-quarter results on September 24.

Japan's recession and slowing sales of Apple's Macintosh have been blamed for the slump, and the company has also been criticized for a lack of new products. Adobe has tried to compensate by pushing products that run on Microsoft's Windows operating system (See related story).

Quark, based in Denver, said it would sell Adobe's K-2 and PageMaker programs to allay antitrust concerns. Its flagship QuarkXPress, widely by newspapers for layout and design and the manipulation of photographs and other digital images, directly competes with PageMaker.

Reuters contributed to this report.