Babson Case Number: BAB050 | Length: 34 Pages

Abstract

This case is intended for use in graduate and executive courses in strategy, industry analysis, and mergers & acquisitions.

Three consumer software firms merged in 1994 to become Softkey International. Seeking to grow an already strong market position by leveraging its considerable distribution muscle, it embarked upon an acquisition spree. After acquiring several smaller companies during the first two years, in 1996 it successfully consummated a hostile take-over of The Learning Company. Softkey adopted the name of its prey to capitalize on its more familiar brand name. Within two years, The “New” Learning Company had become one of the leading players in the budget, personal productivity, reference and education segments of the consumer software market.

While the company was integrating its acquisitions, however, the industry continued to evolve. The Learning Company’s management team was becoming increasingly concerned as its overall market share slid from 17% to 10%. They thought that more acquisitions would be necessary to stay on top of multimedia software field. It was, however, strapped with massive debt. The next several years would indeed be very challenging.