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Daily news podcastCanadian desktop software developer, Corel, is to acquire software tools company Inprise/Borland for $1.071 billion in stock, creating a combined company valued at $2.44 billion.
The companies say the deal will create a "Linux powerhouse", although both are relatively recent to Linux and derive a minimum amount of revenue so far from that market.
"We want to be a single source solution for Linux from one vendor," said Michael Cowpland, Corel chief executive, chairman and president.
In Corel's fourth quarter ending last December, Cowpland said Linux-related sales accounted for about five per cent of revenue. He said he wants that figure to grow to 10 per cent of revenue this fiscal year, or about $20 million to $30 million.
The companies said the takeover, which they emphasised is a merger of equals, will allow them to offer a combined source for Linux services, development tools and productivity applications. Corel already has stakes in Linux startups OE/ONE.com and Newlix.
Kirsten Ludvigsen, an analyst at researcher IDC, said she is not sure how Corel will benefit from acquiring Borland's existing product portfolio, but said it would gain experienced in-house skills and a wide developer community.
"Corel will get a lot of development skills. This acquisition is about the people and the skills and knowledge involved, not any spectacular products Borland has," she said.
Ludvigsen said this would be an opportunity for Corel to open source some of Borland's products and possibly use them to encourage developers to its Linux distribution and Wordperfect on Linux desktop products.
Under the deal, Corel will issue 53.7 million shares to Borland shareholders, resulting in 0.747 Corel shares for each of the 71.7 million Inprise/Borland shares. Based on Corel's closing price on Friday of $20, this values each Inprise/Borland share at just under $15, or $1.071 billion in total.
Dale Fuller, Inprise/Borland's current president and chief executive, will become chairman of Corel.
Job cuts are not ruled out by Cowpland, but he said details would be finalised over the next two months. The combined company will have some 2,200 employees.
The merger will require regulatory and shareholder approval, and Corel expects it to be completed by late spring.
Corel and Inprise/Borland have been doing development work together for some time. Borland sold its Paradox database to Corel in 1996 and its Quattro Pro spreadsheet to Novell in 1993, which then sold it to Corel with the rest of the Wordperfect Suite in 1996.
The two companies have certainly jumped on the Linux bandwagon. Inprise/Borland recently announced a free download of its Jbuilder 3 Foundation - a pure Java development environment for Linux. The company has been shipping its Interbase and Visibroker products for Linux for nearly two years.
Corel announced early in January that it plans to bundle Graphon connectivity software into its desktop version of the Linux operating system to allow users to run Windows applications.
Cowpland said Corel plans to have its key products, including Photopaint, Draw and Wordperfect, running on Linux in the next few months through the Wine Windows emulator software for Linux.
See also:
For C++ developers there is one package that outperforms all others - C++ Builder. And this latest version has plenty of new features to keep users happy. 30 Apr 2000
The graphical installation and the new file manager make Corel Linux one of the most accessible Linux versions available. 01 Mar 2000All IT Management
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