For a reasonably skilled artist it wouldn’t be that difficult to draw a white knight using Adobe’s Illustrator software. Following its decision to purchase Accelio on Friday, however, a copy of Adobe’s own logo might do just as well.
Just when it looked as though Accelio’s shareholders
were about to give in to the inevitable and tender their shares to Open Text, which put in an unsolicited offer for the firm about six weeks ago, Adobe’s 11th-hour bid of US$72 million was a dramatic rescue. Adobe’s offer is 68 percent higher than Open Text’s US$42.8 million. The agreement is subject to a US$2.9 million break-up fee if Accelio’s board of directors approves or recommends a competing offer, but that hardly seems likely. As with its ill-fated takeover attempt of PC Docs (which ultimately went to Hummingbird Communications), Open Text has come up a loser.
The Adobe upset is all the more remarkable given the race which precipitated it. Time was never on Accelio’s side since the first Open Text offer came in on Dec. 17. At the time, Accelio senior management complained that shareholders would not have sufficient opportunity to consider the offer in the pre-Christmas rush. It took until Jan. 7 before the firm officially denounced the Open Text bid as insulting. Just this week the National Post reported that Accelio was entertaining several possible suitors, though Adobe was not on the list of possible buyers.
That wasn’t good enough for AGF Management, owner of 11.8 per cent of Accelio’s shares, which refused to wait to see whether any of the other deals would come through. AGF would have tipped the scales in Open Text’s favour, which had already persuaded shareholders owning 18.8 per cent of the company.
As is common in hostile takeover situations, Accelio was against the Open Text offer because it said it grossly undervalued the company. It is to the company’s credit that while the messy negotiations were going on, the sales side of the organization kept their heads down and came up with win after win. In just the last three weeks, Accelio has been awarded a $5 million contract with the European Financial Services industry, an installation with Dresdner Bank, a deal with the Bank of Cyprus and several others. Lots of companies will insist they are valuable; few of them work so hard to prove it.
In this respect Accelio shares some of the work ethic that led to the formation of Adobe. The graphics software specialist has its origins in the frustrations of John Warnock, who created a post-script language as a scientist at the Palo Alto Research Center (PARC) that eventually became Illustrator. PARC officials weren’t interested in his efforts, so he and associate Charles Geschke struck out on their own to find an audience that valued them. Adobe was formed in 1982, the same year as Accelio (formerly Jetform).
Friday’s purchase seems like a happy ending, but it also puts Accelio’s future direction in question. When experts speculated on other buyers, names like Filenet and Documentum kept coming up — in other words, document management companies. These seemed like a natural match for Accelio, which specializes in electronic forms but which also promotes a strategy called business process management. Whether you buy into that jargon or not, it is fair to call Accelio a process company, whereas Adobe, with its flagship PhotoShop and Illustrator, is a product company.
In a conference call Friday morning Adobe president Bruce Chizen said Accelio would help drive the company’s quest to increase market share for its ePaper platform. In the meantime, it plans to absorb only 250 of Accelio’s 650 employees, which means it will have to demonstrate itself capable of running a more services-oriented organization that may or may not be prepared to embrace ePaper. Adobe is good at promoting innovations that sometimes don’t go anywhere (eBooks, anyone?).
This transition could be as challenging, if not more so, than what Accelio might have experienced under Open Text. Every damsel in distress wants to be saved by a white knight, but no one ever talks about what happens when he takes you back to the castle.