Invensys acquires Baan for $714 m.

Arindam Nag

LONDON: British engineering group Invensys Plc on Wednesday announced an

all-cash takeover of loss-making Dutch software firm Baan for $714 million.

But Invensys shares were hammered after the announcement, falling 17 pence or 6.4 per cent to £248-1/1p at 0824 GMT, recovering from a low of 239 pence, after it said it would pay Euro $2.85 for each Baan share, valuing it at Euro $762 million.

Shares of Baan jumped 15.65 per cent to Euro $3.04 on the Amsterdam Stock

Exchange.

The offer represents an 8.8 per cent premium to Baan's closing share price in

Amsterdam on Tuesday of Euro $2.62. But it is below the closing level of Nasdaq-listed

Baan stock.

The deal, which represents a multiple of around 1.25 times Baan's expected

2000 sales, ends the misery of Baan investors who have seen the value of the

company's shares slump from as high as Euro $49 two years ago.

At one time, Baan was Europe's second largest software company, just behind

Germany's SAP, which is currently valued at over Euro $50 billion.

"The supervisory and management boards of Baan, who have been advised by

Lazard, unanimously recommend all Baan shareholders to accept the offer,"

Baan said.

But traders said the Invensys offer might not be the last word. "There

are rumors that there will be a better offer than the Euro $2.85 from Invensys

or someone else," said a dealer in Amsterdam.

Invensys sees Baan break even in 12 months



Once a darling of the Amsterdam Stock Exchange, the company has suffered
worsening financial difficulties, reporting seven consecutive quarterly losses

and bleak prospects.

But Invensys said it was determined to put an end to all that. Chief

Executive Allen Yurko said the company aimed to see Baan break even in 12 months

and achieve a return on sales of 10 per cent in 24 months.

Baan will become part of a new Invensys Software and Systems (ISS) division

which will have pro forma combined annual turnover of about $2 billion.

Invensys plans to implement a rigorous restructuring and cost management

program and hopes to cut costs by $60 million to $120 million per quarter, by

the fourth quarter of 2000.

It will incur restructuring charges of $400 million over an 18-month period.

Yurko said roughly 1,000 jobs would be lost at the ISS division as Baan

integrated.

Invensys has entered into agreements to buy at the offer price holdings in

Baan from the Vanenburg Group, Fletcher International and General Atlantic

Partners. Their respective holdings in Baan are 5.9, 3.0 and 1.9 per cent. The

Vanenburg Group is controlled by Baan founders Jan and Paul Baan.

The deal was welcomed in Amsterdam, where Baan is headquartered. Analyst at

Rabo Securities Jeroen van Harten said, "I think this is it. This is the

offer and three leading parties have agreed. Even if someone surpassed the

offer, it would be hard to get these parties to agree.

"The price is quite reasonable, considering Baan is in so much trouble.

If nothing happened, bankruptcy was on the horizon," he added.

But traders in Invensys stock in London slammed the deal. One dealer said,

"This acquisition has been one of the worst kept secrets in the market but

now there's going to be some pretty hard questioning of Invensys'

management."

ISS will be managed by Bruce Henderson, currently chief executive of Invensys

Intelligent Automation. Baan's executive vice president of research and

development, Laurens van der Tang will be the division’s president.

Invensys is being advised by Goldman Sachs International and Baan by Lazard

Freres.

(C) Reuters Limited 2000.