London Publisher Buys Software Toolworks : Communications: Pearson Inc.’s acquisition reflects how crucial media giants believe electronic software will be to the future of their businesses.

Marking its first venture into the super-trendy market for interactive software, London-based publishing giant Pearson Inc. said Thursday that it has agreed to buy multimedia publisher Software Toolworks for $462 million, nearly four times the Novato, Calif., company’s annual sales.

The deal reflects how crucial today’s media titans believe electronic software will be to maintaining their stature and financial performance as new forms of interactive entertainment, education and information gain widespread consumer enthusiasm.

“The whole way in which people are educated and entertained is changing,” said Pearson President David Veit. “While we hope people go on buying books, we see interactive media as a powerful alternative. From a parent’s perspective especially, you get more bang for the buck.”

The planned Toolworks purchase is the latest in a series of mergers and acquisitions in the computer and video game software industry, driven by rapidly improving technology, falling computer prices and increasing competition. Last month, Electronic Arts and Broderbund announced a planned merger. Last summer, The Tribune Co. bought Carlsbad-based Compton’s New Media, the largest publisher of CD-ROM software. And Virgin Interactive of Irvine has signaled that it may announce a significant investment or acquisition in coming weeks.

Pearson’s diverse media holdings include The Financial Times newspaper; book publishers Penguin Books, Addison-Wesley and Longman; British TV producer Thames Television, and a 17% stake in satellite broadcaster BSkyB. The company hopes Software Toolworks will help it leverage its traditional properties in a digital world. The plan is to focus on “edutainment,” a segment of the interactive market Pearson expects to grow at 25% annually for the next several years.

An interactive version of the venerable Peter Rabbit tale, for example, may be on the horizon, since Pearson owns the rights to the renowned character. Penguin has published a series of fantasy books that could be converted into interactive games.

Or it could work the other way: Software Toolworks’ hit CD-ROM titles, such as “Mavis Beacon Teaches Typing,” could be converted into books or a cartoon series, Veit said.

For Software Toolworks, the world’s second-largest publisher of CD-ROMs after Compton’s, the deal caps a three-year turnaround from a $38.9-million loss in 1991 to a $3.5 million profit in 1993. For the first nine months of the fiscal year ended Thursday, Toolworks reported a profit of $6 million. Toolworks shares soared $4.375 to close at $14.375 on the Nasdaq market Thursday.

Toolworks Chief Executive Bob Lloyd said the acquisition would enable the firm--long a prisoner to short-term cash decisions--to make strategic investments crucial to future growth. Addison Wesley’s distribution network in educational outlets such as bookstores will be a boon to the company. But he said a deep-pocketed partner doesn’t give the firm a competitive edge in the crucial battle for space on retailer’s shelves.

“Buyers don’t say, ‘Oh you’re part of a $2.5-billion company, now we’ll give you more shelf space.’ It’s neat and cool software that gets shelf space--always has been, always will be,” Lloyd said.

Sales of CD-ROMs, shiny discs which can hold many times the data that can fit on game cartridges or floppy disks, are forecast to more than double this year. They are seen as the precursor to interactive television, and the companies that know how to develop, publish and distribute them are in high demand. As a result, analysts said the Toolworks price of four times annual revenue was not out of line.