ParcPlace to Buy Competing Software Firm

Digitalk Inc., a software programming company, said Monday that it has agreed to merge with a California competitor in a stock swap tentatively worth $47.5 million that will give the surviving company 80% of the market for basic computer language programs.

Privately held Digitalk will merge with ParcPlace Systems Inc. of Sunnyvale, creating a new company called ParcPlace-Digitalk Inc., based in that Bay Area city.

Digitalk said 10 of its 75 employees at its Santa Ana headquarters will be offered jobs at the Sunnyvale office. Digitalk said the merger will have no impact on its remaining 55 employees at a training facility in Portland, Ore., and at several sales offices.

The purchase price will be divided among Digitalk’s employees, all of whom own shares in the company.

Digitalk and ParcPlace both sell computer software that other companies use to write unique programs. The two companies had combined revenue of $55 million, or about 80% of that market, for the fiscal year ended March 31.

ParcPlace’s top executives will lead the new company. Bill Lyons, ParcPlace’s president and chief executive, will continue in those positions. Adele Goldberg, ParcPlace’s chairman, will be co-chair with Digitalk’s chairman, Jim Anderson.

John Carrington, Digitalk’s president, will join Anderson on the new company’s board. Carrington will not be involved in the new company’s day-to-day operations.

Under the agreement, ParcPlace will exchange 3.8 million common shares for Digitalk’s shares. ParcPlace stock rose 75 cents to close at $12.50 a share in Nasdaq trading Monday, making the deal worth $47.5 million.

No date has been set to complete the deal.