Microsoft confirms plans for £900m Danish buy

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The US software giant Microsoft yesterday confirmed plans to make its second-largest software purchase ever with the planned acquisition of the Danish software business Navision.

The move, which had been well flagged, will see Microsoft offer Navision shareholders 300 Danish kroners a share or equivalent shares in Microsoft, in a deal valuing the Danish business at about $1.3bn (£900m).

It will also see the US giant, which is looking to decrease its dependance on its Windows operating system, increase its exposure to the market for selling business software to small and medium-sized firms, particularly in Europe.

The threat of increased competition in the market, however, knocked shares in the UK company Sage, which sells accountancy software, leaving the stock down 1 penny at 189p.

Shares in Navision, which has some 1,300 staff and which counts the furniture retailer Ikea among its clients, finished up 11 per cent at 296.5 Dkr yesterday.

"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's chief executive Steve Ballmer said.

The company plans to integrate Navision with its Great Plains Business Solutions division giving its combined business software operation more than 3,500 staff.

The US giant made its first major foray into selling business software to the small and medium-size enterprise market with the acquisition of Great Plains for $1.1bn at the end of 2000.

It said yesterday that its Great Plains business gains about four-fifths of its sales in the US while almost 90 per cent of Navision's sales come from Europe.

Navision's Denmark headquarters will become the centre of development and operations for Microsoft Business Solutions in Europe, the Middle East and Africa and will be Microsoft's biggest product development centre outside the US.

The Danish company said its joint chief executives, Preben Damgaard and Jesper Balser, would continue to remain "deeply involved" with the business. Mr Balser said: "Through our combined technologies, we will enhance and broaden the solutions that our customers already have invested in, and continue to provide customers with new generations of business applications that make business processes easier and more interconnected."

Navision reported a third-quarter pre-tax profit of 40.1m Dkr yesterday, down from the 57.6m Dkr it made in the same three months last year. Sales were 380m Dkr, up 17 per cent.