- The Washington Times - Wednesday, May 8, 2002

COPENHAGEN (AP) Microsoft Corp. is buying the Danish software company Navision for $1.3 billion in cash and stock as the huge U.S. software maker moves to increase its presence in Europe. It would be Microsoft's second-biggest acquisition ever.
Under terms of the deal announced yesterday, Navision will become part of Microsoft's business-solutions division. Its corporate headquarters in Vedbaek, just north of the capital, Copenhagen, will be Microsoft's center of development and operations for Europe, the Middle East and Africa.
Navision sells applications for enterprise resource planning as well as for customer-relationship and knowledge management. It has been successful in Europe, but has failed to penetrate the U.S. market.
Customer-relationship management allows a company to keep track of its entire relationship with a customer. In addition to recording purchases and notifying users of a customer's service needs, it can link to a company's financial catalog to provide sales estimates, discounts and cross-promotions, and can be used to create a marketing database based on customers' buying habits.
"This is the second-largest acquisition in financial terms in Microsoft history," Microsoft Senior Vice President Doug Burgum said at a news conference. "That's a big endorsement of [Navision]. Microsoft makes long-term bets in markets we think will be successful."
Microsoft's biggest purchase was Visio, a U.S. graphics software maker, which it bought in 2000 for $1.5 billion.
Navision, which has some 1,300 employees in 30 countries, would be the first acquisition for Microsoft since December 2000, when the Redmond, Wash.-based company bought North Dakota-based Great Plains Software for $1.1 billion.
"With this buy, Microsoft will get a strong platform in Europe. And that's good, because Great Plains, Microsoft's business-solution unit, has had great difficulties getting that," said Klaus Kehl, an analyst with Danske Bank.
Microsoft offered Navision shareholders $37 per share in cash or Microsoft shares based on a specified exchange ratio, according to a news release. Navision said its board was recommending unanimously that shareholders accept the offer.
The announcement sent Navision's shares soaring and the stock closed some 11 percent higher at $36.60 on the Copenhagen Stock Exchange. In trading on the Nasdaq Stock Market, Microsoft shares rose 85 cents a share, to $49.47.
"The combined vision, business strategy and product offerings of Microsoft and Navision will provide great benefits to small and midmarket customers and will create strong growth opportunities for Microsoft," Microsoft Chief Executive Steve Ballmer said in a statement.
The deal requires clearance from antitrust authorities and 90 percent acceptance of the offer, which expires on July 5. The two companies said they expected it to be completed within four months.
Navision also released third-quarter results showing a 32 percent decline in net profit to $3.05 million from the same period last year because of higher sales and distribution costs. For the three months ended March 31, sales increased 17 percent to $46.9 million, compared with last year, the company said.
Navision was created in late 2000 by the merger of Danish companies Navision Software and Damgaard.

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