WordStar, Seeking Software Boost, Agrees to Buy Lifetree

In its first major step toward rebuilding its sagging personal computer software business, WordStar International said Monday that it has tentatively agreed to acquire Lifetree Software.

The deal would give WordStar, the Novato, Calif.-based publisher of the No. 3 word processing software program, a new entry into the fast-growing category of writing-assistance software. This market, which analysts say is nearly doubling in revenue each year, includes programs that check the accuracy of spelling and grammar and provide electronic dictionary, encyclopedia and thesaurus references.

Terms of the deal, said to include cash and stock, were not revealed. However, WordStar officials said the purchase price will be based in part on Lifetree’s performance over the next three years. Last year, Sausalito-based Lifetree had annual sales of $4 million. By contrast, WordStar had sales of $37 million and a loss of $4 million in the fiscal year ended Aug. 30.

Lifetree publishes Correct Grammar, a program for both Macintosh- and International Business Machines-compatible personal computers that checks the accuracy of grammar in written text. WordStar’s recently installed president, Ronald Posner, said he expects the Lifetree program to be the first of several writing aids the company will offer soon.

In addition, Posner said, Word-Star has just acquired the right to market two word processing programs for IBM and compatible personal computers, using the popular and fast-growing Windows software technology from Microsoft Corp.