Rumors that troubled Broderbund Software Inc was touting itself around to be bought (CI No 3,423) have proved to be true, but the suitor turns out to be The Learning Co Inc and not Hasbro Interactive Inc as speculated earlier this month. The transaction is being described as a merger, and The Learning Co will issue 0.80 shares for each outstanding share of Broderbund common stock. Based on last Friday’s closing price, this would value the shares at $20 and makes the deal worth around $420m. The deal is subject to the usual conditions, and is expected to close before the end of September. Learning Co chairman and chief executive Michael Perik said Broderbund’s educational, reference and productivity software titles complement those of his outfit. The companies will, he said, benefit from combining their distribution channels, and the acquisition should be accretive to fiscal 1999 earnings. Both companies have had a fairly hard time recently, with The Learning Co taking a dive in 1996 along with the educational software market (CI No 3,235), and having to give up around 25% of the company in return for reducing its debt with a $123m investment from a group led by Thomas H Lee Co last year. In April, Broderbund had to lay off 7% of its staff to cut costs by some $5m, even though it had earlier hit Wall Street estimates with second quarter net income of $3.9m, against a net loss of $3.5m last year, on revenues up 77% at $78.6m. Paul Allen’s Vulcan Ventures last year dumped its entire holding in Broderbund at prices from $21.25 to $23.38, only to see the stock soar to $30.62 shortly thereafter (CI No 3,245).
