Adobe Systems has reacted angrily to a proposed takeover bid by Quark which was made public on Tuesday this week.
In a statement, Adobe confirmed the receipt of what it dubbed "unsolicited letters" from Quark. "Such letters failed to state any material terms that would constitute a firm and bona fide offer, including price," Adobe said.
On Tuesday 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's co-chairman, and CEO and Charles Geschke, Adobe co-chairman and president, of Quark's proposal and requested an August 24 meeting with Adobe management.
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 the products off 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.
Warnock and Geschke, in an August 21 missive to Ebrahimi, replied tersely to Quark's advances. "We are not interested in pursuing discussions as we continue to focus on the exciting opportunities available to our company, stockholders, employees, and customers," the letter stated.
But Quark and Ebrahimi were undeterred, firing off a second letter dated Tuesday urging that the Adobe board reconsider its stance. In the letter, Ebrahimi said that Quark is "disappointed and surprised" by Adobe's response which he characterised as being "mistaken".
While stressing Quark's intention to engage in "direct friendly discussions" with Adobe, he added that his company chose to publicise the discussions to plea its case further. "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 lock-ups, break-up fees or impediments to a transaction with Quark".
Adobe didn't agree. "Quark has itself acknowledged the significant anti-competitive effects of any transaction, which Adobe believes would be harmful to its customers," the company said in its statement issued late Tuesday night.
Adobe recently announced that its third quarter earnings for fiscal 1998, due to end August 28, may fall below analysts' expectations because of poor sales in Japan and a product delay. The financials are scheduled for release on September 24. The company also revealed that a cost reduction program aimed at boosting long-term growth would result in the layoffs of up to 300 of its staff.