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Corel to sell its Linux arm

EXCLUSIVE: Industry sources say Linux Global Partners is poised to sign a letter of intent to buy Corel's Linux division for $5m (£3.5m)

Sounds like troubled Canadian software vendor Corel will soon enlist another company to help bail it out.

According to industry sources, New York venture capitalist firm Linux Global Partners (LGP) is poised to sign a letter of intent to purchase Corel's Linux business. The dollar value of the deal was not known. But one source said that Corel would receive $5m (£3.4m) in cash for its Linux arm, plus retain 20 percent rights to the new LGP-owned Linux company.

LGP vice president of communications Joe Orlando said that LGP "looks at lots of deals and to discuss any one in particular would be premature".

Corel did not respond to a request for comment by publication time.

Sources had indicated in November that Corel was shopping around its Linux business. At that time, LGP was named by sources as one of the parties interested in the purchase.

Corel's decision to sell its Linux business was in some respects expected, but in other ways surprising. At Comdex/Fall in Las Vegas, Corel chief executive Derek Burney maintained that Corel was not abandoning Linux, even though Corel's original Linux champion, former chief executive Michael Cowpland, resigned from the company in August.

In fact, Burney said that Corel was working on new ways to package its desktop-oriented Linux distribution, which is based on Debian Linux.

Some industry watchers, however, predicted that Corel would dump Linux as soon as Cowpland exited. They said that the software maker -- which cut 320 jobs this summer to save money -- needed cash more than it needed Linux.

In October, Corel obtained a $135m investment from Microsoft, in exchange for Corel's pledge to make its products compliant with Microsoft's .Net foundation technologies.

LGP is a holding company, which, as of March 2000, had purchased interests in six Linux companies, plus purchased options in another five Linux-related firms, according to the LGP Web site. LGP does not own any companies 100 percent, but does own controlling interest in several. Typically, LGP does not take a stake of less than 20 to 25 percent in its partner companies.

Among LGP's "partner companies" are Helix Code, Code Weavers (the company behind the Windows-to-Linux porting project called WINE), and Gnumatic (formerly called GnuCash).

Sources said that LGP was not the only company interested in buying Corel's Linux business.

A stealth-mode startup firm in Ottawa called TransGaming Technologies -- comprised of a number of former Corel staffers -- was said to have helped broker the deal between Corel and LGP. TransGaming officials declined to comment on the reports.

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