Adobe Shares Gain 12% on Rejection of Quark’s Offer

Adobe Systems Inc. shares rose 12% on Wednesday after the company rejected an unsolicited takeover bid from rival software maker Quark Inc., raising the possibility that other offers may emerge.

San Jose-based Adobe’s shares rose $3.06 to close at $27.63 on Nasdaq. Closely held Quark disclosed its bid Tuesday and said it may take the offer directly to Adobe shareholders.

Adobe’s market value has shrunk by one-third to $1.86 billion this year amid an earnings decline sparked by Asia’s economic slump and slower sales at Apple Computer Inc.

Quark offered a premium for Adobe, whose shares approached a five-year low Monday.

“Adobe would be a good fit for someone. I’m not sure Quark is the right group,” said Renee Anderson, a security analyst at Invista Capital Management, the third-largest Adobe shareholder, with 2.56 million shares as of March.

IBM Corp. or Hewlett-Packard Co. would be better choices, Anderson said, because Quark is smaller than Adobe and their products overlap. Quark makes QuarkXPress page layout software that competes with Adobe’s PageMaker and Illustrator publishing programs. HP and IBM declined to comment.

Another suitor might be Eastman Kodak Co., said analyst Aaron Scott of Sands Bros. & Co. Kodak might be interested in Adobe’s PhotoShop photography software because “it could spark some growth within a large company like Kodak,” he said. Kodak declined to comment.

Adobe had revenue of $911.9 million in fiscal 1997. That compares with $165.2 million for Quark last year, according to an estimate by market researcher International Data Corp. Because Denver-based Quark is private, a takeover could be more complicated.

Adobe, whose PostScript computer language helped ignite the desktop-publishing craze in the 1980s, has since experienced hard times.

Earnings at the company declined for five of the last 10 quarters. To cut costs, Adobe said two weeks ago it will fire 10% of its 3,000 workers.