MetaTools Will Acquire Fractal for $145 Million

Aiming to create a new powerhouse in visual design software, Carpinteria-based MetaTools Inc. said Tuesday that it will acquire Fractal Design Corp. for about $145 million in stock.

The merged company, with combined revenue of more than $65 million for 1996, would offer a broad range of products for the consumer and professional photography and video markets, digital imaging, animation and computer graphics.

“The opportunities presented by our combination lay the groundwork for truly new possibilities in software design, tools development, visualization and advanced research and development,” said Kai Krause, a legendary computer graphics innovator and co-founder of MetaTools in 1987.

MetaTools is known mainly for its professional video and animation products.

Fractal, based in Scotts Valley, is best known for its Fractal Design Painter--a program used to illustrate everything from video games to Web pages. Painter accounted for about 25% of the company’s revenue in the last quarter, according to Michael Wallace, an analyst with UBS Securities who tracks both companies.

The combined company, whose new name has not yet been determined, would become the third-largest player in the fast-growing computer graphics market behind industry giants Adobe Systems and Macromedia, Wallace said.

The combined company, with about 270 employees, would remain based in Carpinteria but would also continue to operate out of Scotts Valley, Fractal Design’s current headquarters. No layoffs are planned.

Each Fractal Designs shareholder would receive 0.749 share of MetaTools’ common stock. Based on MetaTools’ Tuesday closing price of $15, the deal values Fractal shares at $11.24, up from its closing price of $8.25.

The merger was announced after the close of Nasdaq trading Tuesday. Fractal shares rose 37.5 cents; MetaTools was unchanged.