Learning Co., the No. 1 educational software maker, said Monday that it will buy rival Broderbund Software Inc. for $420 million in stock, giving it the best-selling fantasy game "Myst" and geography game "Where in the World Is Carmen Sandiego?"
Learning Co., formerly SoftKey International, battled Novato, Calif.-based Broderbund in late 1995, when it trumped Broderbund's bid to buy the old Learning Co. SoftKey won the war and took the Learning Co. name in 1996. Since that 1995 clash, both companies have lost more than half their value as they began to bleed red ink. Now Learning Co. will have control over some of the best-known brand names in the consumer software market.
"Broderbund was losing major market share," said Jeff Goverman, an analyst at Pacific Crest Securities. "They would have had to spend money on marketing or cut prices. Things weren't great now, but to get it going would have taken major investment."
The acquisition comes just a week after Broderbund said it would report a third-quarter loss and hired investment bank Donaldson, Lufkin & Jenrette to explore strategic alternatives.
Cambridge, Mass-based Learning Co. will issue 0.8 share for each Broderbund share. Based on Learning Co.'s closing price of $25 on Friday, Broderbund shareholders will get $20 a share--a 21% premium to Friday's close.
Broderbund shares rose $2.25 to close at $18.75 on Nasdaq; Learning Co. shares fell 11 cents to close at $24.89 on the New York Stock Exchange.
In 1995, SoftKey went on a $1-billion acquisition spree to become the biggest maker of educational software.
Broderbund's educational software sales have fallen as it focused more narrowly on entertainment software such as "Riven," the sequel to its popular "Myst."