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Cuc To Acquire Sierra On-Line In Deal Worth At Least $700 Million

Sierra On-Line of Bellevue, Wash., the largest maker of games for personal computers, said Tuesday it will be acquired by CUC International of Stamford, Conn., for more than $700 million.

The final price of the deal, which is expected to be completed in late spring or early summer, will be determined by subsequent trading in CUC stock.

Sierra said that each of its shares will be exchanged for 1.225 shares of CUC, which closed at $31.125, off $6.375 from Friday’s close. At that price, Sierra stock would be worth $38.13. Sierra stock closed at $34.50, up $7.375 from $27.125 on Friday.

Under a deal subject to ratification by Sierra shareholders, Sierra could back out of the acquisition if CUC’s stock fell below $29.

CUC also announced Tuesday that it will acquire Davidson & Associates Inc. of Torrance, Calif., a leading maker of educational software.

Mike Brochu, Sierra president, said Sierra will remain in Bellevue, where it has about 600 employees.

“This should have little, if any, effect on the operations of Sierra,” he said, although some administrative functions would be eliminated. He said those changes would affect relatively few people.

“What we are is a development company, and that will continue,” he said.

Sierra’s founders, Ken and Roberta Williams (he is chairman and chief executive, she is principal software developer) own 1.7 million Sierra shares, about 9 percent of the company. At Tuesday’s CUC price, the deal would make their holdings worth $64.8 million.

“This acquisition represents an opportunity for Sierra to capitalize on what we already do extremely well: develop the highest-quality interactive entertainment, education and productivity titles in the industry,” Ken Williams said. “CUC brings potentially 40 million new consumers into the interactive marketplace. We’re looking forward to growing this business with CUC and reaching every one of those new customers.”

CUC is the nation’s leading provider of membership-based discount services through mail-order catalogs, online services and programs such as Shoppers Advantage and Auto Advantage. The company’s products are available through television’s Home Shopping Club as well as computer services such as Prodigy, CompuServe and America Online.


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