GT Interactive Buys Third Software Firm In Two-Week Period --- Humongous Entertainment, The Creator of Freddi Fish, Fetches $76 Million in Stock
NEW YORK -- In its third acquisition in two weeks, GT Interactive Software Corp. purchased Humongous Entertainment Inc., one of the country's leading children's software publishers, for stock valued at $76 million.</br></br>The sale, which closed yesterday, involved the exchange of four million shares of GT Interactive stock valued $19 each, for all of Humongous's closely held stock. In Nasdaq Stock Market trading, GT's shares fell 50 cents to close at $19.</br></br>GT's move comes as the CD-ROM industry churns out more titles than retailers can promote and market. Andrew Gregor, senior vice president of GT Interactive, said he expects the industry to go through a major consolidation period, one that will result in six or seven major companies dominating at least 80% of the industry within a few years.</br></br>"The model is the record or film studio business," said Mr. Gregor. "Content will always be very important, but there is a lot of content out there. What distinguishes a successful company is the ability to distribute product." Mr. Gregor estimated there are more than 15,000 CD-ROM titles for sale today, although the average mass merchant has room to stock 300.</br></br>GT Interactive, which went public last December, made its mark in the multimedia field as the distributor of Doom, one of the country's most successful CD-ROM action titles. Since then, the company has established itself as a software publisher, primarily of entertainment games created by other companies.