MENLO PARK, Calif. -- Intuit Inc. said Thursday it has agreed to buy ChipSoft Inc. for $225 million in a deal that will create a leading player in the field of personal financial and tax-preparation computer software.
The companies said they expect the deal, under which ChipSoft will become a subsidiary of Intuit, to close by December.
Holders of ChipSoft common stock will receive on a tax-free basis 0. 446 of a share of Intuit common stock for each share of ChipSoft common stock. About 7.25 million shares of Intuit stock will be exchanged for ChipSoft stock representing 39 percent of the combined company.
Initial reaction to the deal was chilly, as shares of ChipSoft fell $1.50 to $13.75 and Intuit shares declined 12.5 cents to $32.125 in over-the-counter trading.
Intuit's products include personal finance software Quicken and small business bookkeeping software QuickBooks, while ChipSoft markets individual tax preparation software TurboTax and MacInTax and professional tax preparation software, TurboTax ProSeries.
ChipSoft will continue operations at its headquarters in San Diego and in Tucson, Ariz., and Boca Raton, La. Intuit operations will continue in its headquarters at Menlo Park, Calif., and in Palo Alto, Calif., and London.
'We are excited about creating a complete financial software and services company with this merger of equals,' said Scott D. Cook, chief executive officer and president of Intuit.
'ChipSoft's strengths in tax preparation software are extremely complementary with Intuit's strengths in personal finance and accounting software and related services,' Cook said.
'We believe that this is a merger where the combination will be much greater than the sum of its parts,' said Charles H. Gaylord Jr., chairman and CEO of ChipSoft.
Cook will continue as CEO of Intuit. Gaylord will continue as chairman of ChipSoft and remain responsible for ChipSoft's new business operations.
The companies said holders of 38 percent of outstanding ChipSoft common stock and 48 percent of Intuit stock have agreed to vote their shares in favor of the merger.
Intuit is expected to post about $110 million in sales in its current fiscal year ending Sept. 30, while ChipSoft reported $70 million in sales for its fiscal year ended June 30.
Earlier this year, ChipSoft tried to acquire its chief rival in tax- preparation software, Meca Software Inc., for $58 million, but that deal was quashed in June by the U.S. Justice Department because of antitrust concerns.