Tech Shout!

On Monday, computer software giant Corel announced that it had signed an agreement to purchase multimedia software publisher InterVideo, most known for its WinDVD lineup, in an all-cash deal valued at $196 million. This initiative will expands Corel’s portfolio into video editing and DVD creation.

Corel’s office products have been on top amid increasing competition from OpenOffice.org, the company has endeavored to shift its software business into multimedia. The company took over JASC Software and its popular Paint Shop Pro offering in 2004 and is readying a new imaging platform code-named Alta.

Through the deal, Corel gains the WinDVD player and WinDVD Creator, which both recently added support for HD DVD and Blu-ray. What’s more…thanks to InterVideo’s merger with Ulead in July, Corel will also add to its product lineup Ulead Photo Impact, UleadVideoStudio and Ulead DVD Movie Factory.

Corel CEO David Dobson said, “With outstanding products, talented employees and deep relationships with eight of the world’s top ten PC manufacturers, InterVideo represents a significant opportunity for Corel to deliver enhanced value to our shareholders. This acquisition will also benefit customers and partners as we expand our ability to provide flexible, bundled solutions that meet the needs of today’s digital media consumers.”

It is InterVideo’s partnerships with computer makers that has played a pivotal part in the deal says Jupiter Research senior analyst Joe Wilcox.

InterVideo’s DVD playback software is broadly bundled with new PCs. The company also has OEM deals for some of its other video software. If the folks at Corel are smart, they’ll leverage some of these relationships for extending the OEM reach of other products, like WordPerfect, Painter, the forthcoming Alta or WinZip (yeah, the company bought the compression software in May), remarked Wilcox.

Combining the strengths of InterVideo and Corel will provide the best return to our partners, customers and shareholders,” said Steve Ro, President and CEO of InterVideo.”Throughout our history and with our acquisition of Ulead in 2005, we have built a library of leading video and high definition products with more than 175 million lifetime installations of our WinDVD software. Corel shares our product and distribution strategy, creating immediate synergies to drive more value for our companies, our OEM partners and the end-consumer.

InterVideo’s directors and executive officers, including Steve Ro, Chinn Chin and Honda Shing, have entered into voting agreements pursuant to which they have agreed to vote their shares of InterVideo in favor of the merger.

Corel is now competing directly with Sonic Solutions, which Wilcox notes has a both a strong retail and OEM presence. The acquisition is expected to close by Q4 of 2006.