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Monday, August 28, 2006

Corel + InterVideo

InterVideo (IVII) is being acquired by Corel (CREL) in a $196 million pact, which is a $13.00 per share cash buyout. InterVideo closed Friday at $9.60 per share, and its 52-week trading range is $8.46 to $11.60. In the last two years, IVII did briefly spend time above this buyout price. Before the buyout, IVII's market cap was $134 million. Corel's market cap is merely $242 million, so the company is actually making a pretty big bite here even if the deal looks small on a nominal basis.

So on top of Corel's office suites and its photo/painting suites, here is what they will get: InterVideo's suite of advanced digital video and multimedia software products allow users to record, edit, author, distribute and play digital multimedia content on PCs and other devices. In 2005, InterVideo also acquired a majority interest in Ulead, a leading developer of video imaging and DVD authoring software for desktop, server, mobile and Internet platforms. When the acquisition is completed, Corel will provide the industry's broadest portfolio of digital media software ranging from photo sharing and image editing products to advanced digital imaging, video editing, and high-definition DVD creation and playback software.

This acquisition will be financed through a combination of Corel's cash reserves, debt financing, and InterVideo's cash and cash equivalents which stood at approximately $105 M as of June 30, 2006.

Jon C. Ogg
August 28, 2006

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