Software developer Ashton-Tate said Monday that it has agreed to buy MultiMate International of East Hartford, Conn., for $19 million, a move that for the first time gives Ashton-Tate a leading position in the key word-processing segment of the industry.
Ashton-Tate, based in Culver City, is principally acquiring a widely used software program for personal computers called MultiMate, which is used for writing. It will broaden the company’s product offerings and increase annual revenue by about 25% to roughly $102 million, Ashton-Tate said.
The company said it is buying the privately held firm with 1 million shares of common stock and an undisclosed amount of cash. At a recent selling price of about $11 per share, Ashton-Tate would be paying about $8 million in cash.
Expands Into Word Processing
“This was the major piece we were looking for,” said Edward M. Esber, president and chief executive of Ashton-Tate, which has been on the acquisition trail for several months. The companies expect the deal to close by year-end.
Ashton-Tate’s products are the database and integrated types of software programs, neither of which enables computer users to do serious writing. Yet word processing, or writing, is done by about 50% of all users of personal computers, according to the market research firm InfoCorp.
Moreover, Lotus Development, the No. 1 software firm for personal computers, is understood to be developing a word-processing program.
“It’s a smart move,” said Robert M. Lefkowits, head of software services at InfoCorp. “If Ashton-Tate wants to do a full-blown word-processing program, it’s essentially foolish to develop it on your own. That they were able to get a leading company like MultiMate is a feather in their hat.”
MultiMate, the No. 2 developer of word-processing programs behind Micropro International, which sells WordStar, aimed its programs at owners of Wang computers who wanted a word-processing program compatible with the IBM PC. MultiMate “made the PC look like a Wang” and thus contributed to the recent decline in sales of Wang computers, Lefkowits said.
Esber said MultiMate had unaudited pretax earnings of $2 million in its most recent quarter on sales of $7.4 million.