Sherwood is to be bought by SunGard for £65.1m, or 140p a share.
The deal offers a 10% premium to Sherwood's closing price of 127.5 on
Wednesday, before the announcement was made.
Insurance Times reported last week that the deal was imminent.
The price is at the lower end of the scale expected, which was between 140p and 150p a share.
SunGard, a US financial software giant, last year bought Guardian IT for £56m. Buying Sherwood is seen as a move to strengthen SunGard's hold on the UK and European markets.
Sherwood recorded sales of £52.2m in 2002, the last year for which figures are available, against £56.5m in 2001. It made an operating profit before exceptional items of £4.6m.
