The End of Sierra as We Knew It, Part 1: The Acquisition

Summary

I feel very comfortable working in a company where you can’t touch anything. — Walter Forbes At the beginning of 1996, Sierra On-Line was still basking in the success of the previous summer’s Phantasmagoria, the best-selling game it had ever published. With revenues of $158.1 million and profits of $16 million in 1995, the company was bigger and richer than it had ever been. In light of all this, absolutely nobody anticipated the press release that went out from Sierra’s new headquarters in Bellevue, Washington, on February 20. It announced that Sierra would soon “merge with CUC International, Inc., a technology-driven retail and membership-services company that provides access to travel, shopping, auto, dining, home-improvement, financial, and other services to 40 million consumers worldwide. Sierra stockholders will receive 1.225 shares of CUC common stock for each share of Sierra common stock. The transaction is valued at approximately $1.06 billion. The merger is subject to stockholder approval and other customary closing conditions.” As this bombshell filtered down to the gaming sites that were popping up all over the young Web, and eventually to the laggardly print magazines, one question was first on the lips of every gamer who read about it. Just who or what was this CUC International anyway? Or, to frame the question differently: if CUC was such a big wheel, why had no one ever heard of it, and why did CUC itself seem to have such a hard time explaining what it actually did? Time would show the answers to both of those questions to be more complicated and fraught than anyone could have expected. Still, it was clear from the outset that the path to understanding must pass through CUC’s CEO, a sprightly, dapper-looking man of business named Walter Forbes. This particular Forbes was not a member of the wealthy family who owned and operated Forbes magazine, one of the business and investment world’s primary journals of record. That fact notwithstanding, he had ...