The result will be a company focused more strongly on luring customers to Linux, a competitor to the Windows operating system. The merged company will provide stiffer competition not only to Microsoft, but also to Red Hat, the Linux seller that gained access to programming tools with its acquisition of Cygnus Solutions in November.
Corel has been an active supporter of the Linux operating system as a way to sell its WordPerfect office software suite. To hasten the day when Linux can be used by relatively non-technical people, Corel has been selling its own version of the operating system. Linux currently is most popular on the more powerful servers rather than ordinary desktop computers.
Corel for years has struggled to keep its head above water when competing against Microsoft, while Inprise is one of several programming tools companies in a struggling industry. But the two companies apparently believe they can use Linux to ferry them through difficult times, carrying enough weight together to convince the computer industry that Linux is worth betting on.
Though the companies clearly hope to benefit from the popularity of Linux, they're not shunning the Windows products that currently are the majority of both companies' revenues. "Microsoft will continue to be a player in this world for a few more years," said Inprise/Borland chief executive Dale Fuller.
This year, Corel hopes to garner $20 million to $30 million in Linux revenues, said chief executive Michael Cowpland. Those sales will be bolstered by the company's new office suite for Linux, due in April, he said.
Selling programming tools hasn't been difficult just for Inprise. Last year, Sun Microsystems purchased Forte for $540 million, while Motorola acquired Metroworks for $95 million. Even mighty Microsoft has had a hard time, as its Java programming tools have stagnated amid a long-running Java lawsuit brought by Sun.
Corel has reason to be fond of Linux. Not only has the Linux connection helped Corel's stock price, but the company has made $3.2 million in revenue from its version of Linux between its November debut and the end of 1999, according to International Data Corp.
Inprise/Borland, meanwhile, has made several recent moves to turn enthusiasm for Linux into revenue. Last week, the company opened a Web site for Linux developers as well as Linux versions of e-commerce software such as its Application Server and VisiBroker packages.
"There is the same kind of enthusiasm picking up for Linux that has occurred in the dot-com world. A lot of investments are happening, a lot of acquisitions are happening," said Tom Henkel, an analyst for consulting firm Gartner Group, but he remains cautious about how exactly Linux-based business plans will work out. "A lot of companies are trying to feel their way in this market. There remains that nagging question of making money," he said.
One threat to Corel's plan to sell office software for Linux, for example, is Sun Microsystems' decision to make its comparable StarOffice software a free download or cheap CD, Henkel said.
Inprise/Borland, long a significant supplier of tools that ease the task of developing software, has been increasing its focus on Linux in recent months as well.
The acquisition is the second major buy driven by the arrival of Linux. Last week, VA Linux Systems bought Andover.Net for about $1 billion.
After the merger, which has been approved by each company's board of directors, Inprise/Borland will be a wholly owned subisidiary of Corel, and Inprise/Borland shareholders will own 44 percent of Corel.
Corel chief executive Michael Cowpland will remain as president and chief executive of the combined company and headquarters will stay in Ottawa. Inprise's chief executive will be appointed as chairman of Corel's board.
Under the deal, Inprise/Borland shareholders will receive 0.747 shares of Corel stock for each share of Inprise/Borland stock.
Corel shares fell 81 cents to $19.19 in early afternoon trading. Inprise/Borland shares rose 56 cents to $13.50.
The acquisition of Inprise/Borland could mean a change in Corel's strategy to bring its software to Linux. Previously, the company had worked with Cygnus Solutions to help move its software from Windows to Linux, but now Cygnus is part of a direct competitor, Red Hat.