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Broderbund, Learning Company Unveil Plans To Merge

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Two of the nation's largest and best-known educational-software companies have announced plans to merge, creating what would be one of the largest single producers of educational and "edutainment" programs.

Broderbund Software Inc. of Novato, Calif., made public in late July its plans to acquire the Learning Company of Fremont, Calif. The deal must be approved by each company's stockholders and by federal antitrust regulators. Company officials expect the deal to be completed by next month.

Broderbund proposes to buy the Learning Company for $440 million in Broderbund stock. Under the terms of the proposed agreement, the Learning Company would become a wholly owned subsidiary of Broderbund.

A Growing Market

"We are combining to pursue the significant growth opportunities presented by the educational-software market," Doug Carlston, Broderbund's chairman and chief executive officer, said in announcing the plan.

Broderbund, which aims its products largely at the home market, is best known as the developer of the Carmen Sandiego series, which helps young children learn geography. But it also brought Myst, an innovative game, to homes.

The Learning Company, which develops products for both the home and school markets, is best known for its series of early-childhood-literacy titles in the Reader Rabbit series.

Nevertheless, both companies are among the top 10 software developers in terms of sales to schools, according to newly compiled statistics furnished by Quality Education Data, a Colorado-based market research firm. Moreover, Broderbund products are found in more schools than those of any other company, noted Jeanne Hayes, QED's president.

Fueled by a recent surge in the purchase of home computers, sales of educational software to the home market now surpass those to the traditionally stronger school market. (See Education Week, April 26, 1995.)

The proposed merger would allow Broderbund to target both markets. It also would position the company as a strong player in a software field that is expected to grow explosively in coming years. Sales of home education software doubled last year to some half-billion dollars.

Nationally, schools spend only 10 percent of their roughly $2 billion budget for materials on software. But that percentage is expected to increase rapidly as more powerful computers appear in classrooms and as more states and districts allow schools to buy electronic media with their textbook dollars.

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