Arbor, Hyperion to Merge in $798-Million Software Deal

Arbor Software Corp. and Hyperion Software Corp. said Tuesday that they agreed to merge in a $798-million transaction that would create one of the biggest business-analysis software companies in the world.

Sunnyvale-based Arbor writes software that helps big companies look at their business data from different perspectives to shape their strategies. Hyperion, based in Stamford, Conn., makes computer programs that consolidate and analyze accounting information from far-flung operations.

The combined company, to be called Hyperion Solutions Corp., would provide the tools big companies need to gather data, analyze it and set business plans.

Hyperion Solutions would pursue a market that is expected to triple in sales to $2.6 billion by 2001, representing one of the faster-growing segments of the software business. Under the agreement, Arbor Software would give 0.95 share of its stock for each of Hyperion’s 19.94 million shares outstanding. Based on Friday closing stock prices, Arbor would pay about $40.01 a share, or $798 million, to shareholders.

Shares of both companies plummeted Tuesday, however, on concern that the merger could slow Arbor’s revenue growth, which ranks at the top of the software industry. Some investors also were concerned that the combination could be difficult because of the technology, analysts said.

In Nasdaq trading, Arbor shares dropped $8.25, or 20%, to $33.88, and Hyperion fell $6.75, or 18%, to $31.38.

Arbor shareholders would own about 40% of the new company; Hyperion shareholders would own the remaining 60%.