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Adobe to Expand ePaper Business By Acquiring Accelio Corporation

Monday, February 04, 2002

Press release from the issuing company

SAN JOSE, Calif.-- February 1, 2002-- -Adobe has agreed to acquire publicly-held Accelio Corporation of Ottawa, Canada. Accelio is a leading provider of Web-enabled solutions that help customers manage business processes driven by electronic forms. The acquisition of Accelio enhances Adobe's ability to quickly broaden its ePaper solution business by combining Accelio's electronic forms solutions with Adobe Acrobat and Adobe Portable Document Format (PDF) technologies. Under the terms of the agreement, Adobe common stock valued at $72 million (U.S.) on closing will be exchanged for all Accelio equity securities. This translates into approximately $4.50 (CDN) per Accelio share on a fully diluted basis at current exchange rates. The Accelio business will be integrated into Adobe's operations. Adobe expects to record an acquisition charge in the range of $12 to $15 million as a result of the acquisition. The terms of Adobe's offer have been unanimously approved by the boards of directors of each company. The value of Adobe's offer is superior to the unsolicited bid for Accelio by Open Text Corporation that was rejected last December by Accelio's Board of Directors. "The migration to electronic forms-driven business processes is accelerating in corporations, governments and institutions around the world,'' said Bruce Chizen, president and CEO of Adobe. "Our strong market position with our Adobe Acrobat family of products has helped drive this trend. This acquisition quickly positions Adobe as a leader of business process solutions, which is the logical next step in the evolution of our ePaper platform.'' Among the trends driving ePaper opportunities are business processes driven by electronic forms in several market segments such as financial services, manufacturing and government institutions worldwide. By combining Adobe Acrobat, Adobe PDF technologies and Accelio's server-based solutions, Adobe's intent is to deliver leading electronic forms application solutions. This strategy is expected to result in greater opportunities to deliver high-value, complete solutions for enterprise-class customers. Leveraging Adobe PDF technologies and the installed based of Acrobat Reader, the Adobe Acrobat product family was the company's fastest-growing business in fiscal 2001, growing in revenue by 41 percent year-over-year. To date, Adobe has distributed over 400 million copies of Acrobat Reader on 13 different platforms. In October 2001, company officials estimated that the ePaper and electronic forms market opportunity for Adobe would be more than $3 billion in size by 2004. According to Kevin Francis, president and CEO of Accelio, the acquisition by Adobe offers the greatest potential benefit to Accelio shareholders, customers and employees. "Accelio's mission is to help our customers extend and accelerate their core business processes,'' said Francis. "Adobe's strategy for expanding its ePaper solutions business is complementary with Accelio's approach, and there are significant synergies in both the technologies we are developing and the markets we serve. Through the combined strengths of the two companies, we expect that Adobe will have the opportunity to quickly create a more complete enterprise-class solution than either company could have created on its own.'' In conjunction with the acquisition announcement, Adobe provided the following changes to its fiscal year 2002 operating targets: gross margins of approximately 92 percent, down from pre-acquisition guidance of 93 percent; operating margin of 27 percent, down from the pre-acquisition target of 28 percent; and an increase in the fully-diluted share count of approximately two million shares. Additionally, Adobe expects the acquisition will result in pro forma earnings per share dilution of approximately $0.02. Adobe is targeting additional revenue from the acquisition of approximately $30 to $35 million in fiscal year 2002. The acquisition of Accelio is subject to the execution of customary transaction documents and the satisfaction of customary closing conditions, including the approval of Accelio's shareholders and clearance of the acquisition by U.S. and Canadian regulatory authorities. The transaction is expected to close in late March 2002.




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