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Sybase to Buy Powersoft for $940 Million : Computers: Merger would create world's largest provider of client-server software with 2,000 vendors.

November 15, 1994|From Reuters

BOSTON — Sybase Inc. said Monday that it will acquire Powersoft Corp. for about $940 million to form the world's largest provider of client-server software, an increasingly popular tool used to link company branch networks to a central location.

Shares of Powersoft, which has a 40% share of the world's client-server market, soared $7.875 to $69.25 on the Nasdaq. Sybase fell $2.06 to $46.31, also on Nasdaq, where both stocks were among the most active issues.

Under the agreement, Sybase will offer 1.6 shares for each Powersoft share in a tax-free pooling of interests. Powersoft will become an independent subsidiary of Sybase.

The merger is subject to approval by the stockholders of each company and regulators.

"This merger will create the worldwide leader in client-server software," Mark Hoffman, Sybase chairman, president and chief executive, said in a statement. "The combination . . . strengthens our expertise, distribution, and product solutions to scale from the desktop to the enterprise."

The combined company will be the world's seventh-largest software provider, with annual revenue of $730 million, more than $236 million in cash and about $365 million in equity. Its combined annual growth rate of 75% makes it the fastest-growing among the world's Top 10 software companies.

Sybase, based in Emeryville, Calif., is one of the fastest-growing suppliers of client-server-based software and services. It had sales of $427 million last year, up 61% from 1992. Its revenue for the year through the third quarter was $617 million, up 67% from a year ago.

Powersoft, based in Concord, Mass., had 1993 sales of $57 million, up 118% from a year ago. Its latest annual revenue rose 146% to $113 million.

The combined company will have more than 2,000 independent software vendor and application partners. Sybase distributes software mainly through its direct-sales organization, while Powersoft's focus has been on resellers, complemented by a direct-sales force.

Sybase and Powersoft, which have cooperated for the past four years to provide software, said they will continue their commitment to open systems. Powersoft will remain an open database tools provider, while Sybase will continue to work with client-server tools of other companies as well as its own.

Powersoft estimates that half its customers use Powersoft tools with SYBASE SQL Server databases. Sybase estimates that 30% of its SQL Server customers develop applications with Powersoft tools.

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