Software Giants Broderbund, Learning Co. Agree to Merge : Education: The $440-million deal would be the largest in the lucrative ‘edutainment’ market.

In what would be the biggest merger to date in the exploding educational software industry, Broderbund Software Inc. and Learning Co. said Monday that they plan to combine the two firms in a deal valued at $440 million.

Novato, Calif.-based Broderbund has long dominated the consumer educational software market with “edutainment” products such as its Living Books and Carmen Sandiego series, but the firm has been looking for a partner to broaden its reach into the lucrative school market.

Learning Co., best known for its more nuts-and-bolts educational products, such as Reader Rabbit, Student Writing Center and Learn to Speak foreign language titles, fits the bill.

The software industry as a whole--and especially the consumer segment--is in the midst of a major consolidation, with firms scrambling to acquire the size needed to gain shelf space and customers’ attention. Broderbund is often mentioned as a company that is likely to be acquired by a major media company looking for an entrance into the interactive world.

But Broderbund pulled out of a proposed merger with Electronic Arts. It has made acquisitions in the past, but Monday’s was by far its largest.

“We are combining to pursue the significant growth opportunities presented by the educational software market,” Doug Carlston, Broderbund’s chairman and chief executive, said in a statement. “This merger allows us to broaden our line of product offerings to encompass products with more directed learning activities and to provide a full solution set to the home and school markets.”

Under the terms of the deal, Learning Co. will become a wholly-owned subsidiary of Broderbund. Bill Dinsmore will continue as the firm’s president. Along with Learning Co. Chairman Reece Duca, he will join the Broderbund board.

The holders of Learning Co. common stock will receive 0.8125 share of Broderbund common stock for each share of Learning Co. stock. The deal was announced late Monday after the markets had closed. Learning Co. shares closed up $1.50 at $39 on Nasdaq, while Broderbund eased $1 to $72. The deal’s $440-million value is based on Broderbund’s closing stock price.