Struggling applications vendor Corel has secured £92.85 million in funding from Microsoft as part of a strategic relationship that will see the companies do joint development work on Microsoft's .Net Internet initiative.

Canada-based Corel has endured a number of shakeups in the past year as it struggled to turn around a string of poor financial quarters.

Corel and Microsoft said they plan to develop, test, and market products related to Microsoft's .NET platform - a broad initiative to supply products and services that should enable new types of Web-based services.

The announcement will come as a surprise to some industry watchers.

The two companies have been fierce rivals in the productivity applications market, and ex Corel boss Michael Cowpland has been one of Microsoft's more vocal critics.

Part of yesterday’s deal involves settling outstanding various outstanding legal disputes between the two companies.