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SoftKey Announces Talks On Hostile Takeover Bid For Learning Co.

December 7, 1995

BOSTON (AP) _ Educational software maker Learning Co. has agreed to a sweetened, $606 million takeover bid by SoftKey International Inc., terminating an earlier deal with Broderbund Software Inc., it was announced today.

The revised bid is ``clearly in the best interests of The Learning Company’s stockholders,″ Bill Dinsmore, chief executive of Learning Co., said in a joint statement by the companies.

Cambridge, Mass.-based SoftKey made its hostile bid Oct. 30, offering $606 million worth of stock. But its stock declined in recent weeks, dragging down the value of that offer.

Broderbund’s offer, initially worth about $550 million, has also declined in value with its stock price. This morning, Broderbund stock was trading at $58.31 a share, making its bid worth about $499 million.

With backing from the Tribune Co., SoftKey sweetened its offer considerably on Monday, proposing $559 million in cash and another $47 million in stock, or about $65 a share.

Talks on the new bid began Tuesday night, and culminated with this morning’s announcement.

Learning Co. officials had expressed concern that SoftKey would slash its software prices and cut its research and development budget after a takeover. SoftKey says Learning Co., based in Freemont, Calif., would do better by making its software more affordable.

``There will be tremendous opportunities for The Learning Company. Developers and creative talent at Softkey,″ SoftKey president Kevin O’Leary said in the statement.

SoftKey sells its software in supermarkets and other general outlets for less than $20. Many of its programs have been purchased from other companies and repackaged for the mass market.

Broderbund and Learning Co. typically sell their computer programs in the $40 to $80 range.

Learning Co. shareholders had been scheduled to meet in four days to vote on Broderbund’s offer. That meeting has now been canceled.

Under the agreement announced this morning, SoftKey will purchase the 8.28 million outstanding shares of Learning Co. for $67.50 each in cash, or $558 million. SoftKey also will offer $48 million worth of its common stock in exchange for Learning Co. stock options that its employees have not yet exercised.

Broderbund, a Novato, Calif.-based maker of entertainment and educational software, had offered 0.92 share of its stock for each of the 9.3 million outstanding shares of Learning Co.

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