Original URL: https://www.theregister.com/1999/11/30/red_hat_aiming_to_buy/

Red Hat aiming to buy Corel Linux rival?

Scene set for WordPerfect's revenge...

By Graham Lea

Posted in On-Prem, 30th November 1999 10:02 GMT

Corel shares soared yesterday on speculation that Red Hat was planning a bid for the rival Linux distributor. The market clearly views the possibility as a marriage made in heaven, because Red Hat stock promptly hared after it. Corel stock closed at $20 7/8 (up 48 per cent) and Red Hat at $236.625 (up 11 per cent). In the last week, Red Hat's share price has increased 95 per cent, giving it market capitalisation of more than $15 billion. Those not in on the ground floor in August when Red Hat was initially priced at $14 will be eyeing the present $236.625 with some disappointment. As yet, there's been a no-comment-on-speculation from Red Hat, and "we haven't been approached by Red Hat" from Corel. So far, the trading pattern in the shares suggests that it is day traders who are jumping in on the high level of activity, rather than action by insiders. The rumour resulted from financial analyst speculation that because Red Hat had acquired the privately-held tools maker Cygnus in mid-November for $674 million, other acquisitions were likely. Other possible objects of Red Hat's affection, and significant financial leverage, include Sendmail, and perhaps Mozilla. Red Hat announced yesterday that it had concluded a deal to provide consultancy and support to AutoZone, an auto parts retailer that plans to install Linux terminals in its 2,800 stores. In September, the Burlington Coat Factory Warehouse installed Linux in its 260 stores. It certainly would make sense if a Red Hat-Corel deal were consummated. Corel could bring to the party its retail distribution capability, its WordPerfect suite, and its graphics for the masses. Corel's Linux distribution has been topping the download charts, so there could be some concern by Red Hat that although Red Hat has 68.7 per cent of the US market, according to IDC, Corel could rapidly become a contender. The prize however for Red Hat would be Corel's WordPerfect suite, especially in view of the Linux editions and the continuing affection for the product, despite its troubled history. Even the Department of Justice and Judge Jackson use Word Perfect. The big loser in the WordPerfect story has been Novell: it finally disposed of its Corel shares just before the Corel share price spiralled upwards. Yesterday Corel launched its WordPerfect Family Pack at $79, with a mail-in rebate of $20 for North American users. The product includes WP8, the Quattro Pro8 spreadsheet, as well as graphics, photo, typing, clipart, and the Compton encyclopaedia. Corel CEO Michael Cowpland still has an appointment with the Ontario Securities Commission in January following an investigation of alleged insider trading, which he strongly denies. ®