Corel, the Canadian software company, has bought InterVideo, developer of video and photo editing software, for $196m as part of a drive into the booming video sector.

Corel, whose software includes WordPerfect word processing and Corel Draw and Paint Shop Pro graphics, will add InterVideo’s WinDVD digital video disc playing and creation software to its stable.

It also picks up Ulead’s Photo Impact, VideoStudio and DVD Movie Factory, because InterVideo acquired a majority interest in Ulead, a rival image software company, last year.

Video has become a hot area both for editing and uploading videos on a PC and sharing and editing online. Sony bought Grouper, an online sharing and video editing company, last week for $65m.

David Dobson, Corel chief executive, said the InterVideo acquisition was a strong fit for its Alta web video platform due to launch in the autumn.

InterVideo comes pre-installed on many PCs, as does Corel’s WordPerfect, through agreements with manufacturers.

“We now have critical mass and that’s the important thing, we will have a very large customer base,” said Mr Dobson.

With Intervideo’s cash and cash equivalents on hand of $105m at June 30, the deal is costing Corel only around $100m and is expected to close in the fourth quarter.

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