Corel sees Intervideo acquisition as opening door to OEMs

Corel Corp. on Monday made its first acquisition since it became a public company again, paying about US$192 million to acquire the assets of DVD software marker Intervideo.

The Ottawa-based firm said Intervideo would complement its photo sharing and editing products with a broad portfolio of tools to create, distribute and display multimedia content on PCs. Intervideo, based in Fremont, Calif., gained a stronger foothold in the market last year through an acquisition of its own. It bought Ulead, a developer of video imaging and DVD authoring software for desktop, server, mobile and Internet platforms such as DVD Movie Factory and PhotoImpact. Intervideo is also known for its WinDVD and WinDVD Creator line of products, which it sells online.

Corel, which has made forays into Linux, XML and other areas to boost its enterprise business, has spent the last few years retrenching in the consumer space following its takeover by Vector Capital, which started making shares available again in May.

Corel chief executive David Dobson said the company was attracted by Intervideo’s position in the high-definition and Blu-Ray sectors of the consumer market, as well as its relationships with eight of the 10 top original equipment manufacturers.

“It’s a transaction that includes many of the same features of Jasc and WinZip,” he told a conference call, referring to two other recent Corel acquisitions. “We can eliminate duplicate costs of running two public companies and e-stores, and the increased critical mass will present other opportunities.”

Dobson said Intervideo has a user base of 175 million installations and a significant presence in the Asia-Pacific region, which Corel has identified as a potential area of growth. Its agreements with PC manufacturers, meanwhile, could spur some new strategic partnerships, he added. 

“We’ll be an aggregator across a very important market space, which is the digital imaging space,” he said.

Earlier this year, for example, Corel signed a nonexclusive deal that will see Lenovo install its Small Business software suite on its 3000 line of notebooks. Although that partnership hasn’t translated into market share gains yet, Dobson said, “Now we think there’s an opportunity to go back into those accounts with Intervideo.”

Dobson indicated this will by no means be the last takeover for Corel, which has created a new set of policies around choosing acquisition targets since its initial public offering earlier this year. These include financial critical mass, a large user base, distribution leverage, product/segment synergy and cost/expense synergies.

“Intervideo products will fit right in,” he said. “Overall we believe this is a highly complementary product mix.”

Digital imaging represents 60 per cent of Corel’s revenue prior to the Intervideo acquisition, Dobson added.

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