Babbage's, Software Etc. Agree to Merge: The two software retailers said they will join forces to compete better for sales of personal computer games and other programs. The combining of Dallas-based Babbage's Inc. and Minneapolis-based Software Etc. Stores Inc. would create the nation's largest chain of software stores, with nearly 700 outlets and more than $500 million in revenue. Under the deal, Babbage stockholders would get 1.3 shares of stock in the new company for each share they now own; shareholders in Software Etc. would get one new share for each current share. The firms would not place a dollar value on the arrangement.