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Noted Educational, Entertainment Software Firms Announce Merger

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Two California firms have announced a proposed merger that would create the world's largest developer of educational and entertainment software.

Under a $400 million stock swap made public this month, Broderbund Software Inc., the publisher of the popular "Carmen Sandiego'' line of educational-software programs, will become an independent subsidiary of Electronic Arts Inc., one of the nation's largest video-game publishers.

Broderbund, which is based in Novato, Calif., reported sales of $96 million in 1993, while the San Mateo, Calif.-based Electronic Arts recorded $298 million during the same period.

If Electronic Arts stockholders approve the merger, it will give both companies an important competitive advantage in the rapidly growing home market for educational titles, where such industry giants as the Microsoft Corporation have recently begun to make inroads. (See Education Week, Jan. 12, 1994.)

"This partnership enables us to expand our product offerings to next-generation hardware systems and to take advantage of Electronic Arts's investment in leading-edge tools and technology in that area,'' said Doug Carlston, Broderbund's chairman and chief executive officer.

Officials of the two companies estimate that their combined annual sales could grow to $500 million as a result of the merger, which is expected to be completed in May.

International Market Eyed

Mr. Carlston also noted that the merger will also allow Broderbund to expand its market into countries served by Electronic Arts's international sales force, including Britain, Australia, Japan, and Canada.

Broderbund, which was founded by several members of the Carlston family in 1980, is particularly well known for its line of products featuring Carmen Sandiego.

Such titles as "Where in the World is Carmen Sandiego'' and "Where in Time is Carmen Sandiego'' encourage children to track the title character--a "master criminal'' who perpetrates high-profile crimes--across the continents or through history. As they search for clues to her whereabouts, players learn key concepts about geography or history.

In a modified format, "Where in the World is Carmen Sandiego'' has also become a popular children's-television program for the Public Broadcasting Service.

At least 85 programs published by Broderbund, including "Where in Time,'' were among the roughly 1,000 highest-rated educational-software programs included in Only the Best, a 1991 guide to exemplary educational software published between 1985 and 1993.

The proposed merger was clouded somewhat by reports, published in The Wall Street Journal, that the price of Broderbund stock had risen 22 percent in the three days before its acquisition.

But a Broderbund spokeswoman attributed the increase to favorable reports from market analysts about the company's financial health.

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