While a would-be saviour for troubled ERP vendor Baan has finally appeared in the form of Invensys, a London-based industrial automation and control products manufacturer, in Australia the razor has been well and truly taken off local operations.
Invensys, which has already bought two other applications vendors in the past two years, plans to buy Netherlands-based Baan for $US708.7 million in an all-cash deal, the companies announced last week. The offer for Baan, which has lost money in seven straight quarters and had four CEOs since mid-1998, the latest one on an interim basis, is scheduled to be officially launched by Invensys in three weeks.
The news comes hot on the heels of a rash of retrenchments at Baan's Sydney operation including that of well-known channel identity and 3Com's former local head, Gerhard Rumpff. The loss of 14 jobs led to speculation that it was planning to shut up shop in Australia. The company's new MD, Yunus Docrat, had not returned ARN's calls at press time, but a spokesperson denied that the local operation was closing and said there are still 35 staff in the Sydney office.
If the takeover deal goes through, Baan would be folded into a new Invensys Software and Systems (ISS) division that Invensys also announced last week, as part of a preliminary release of the financial results for its fiscal year ended March 31. The ISS division is expected to have annual sales of about $US2 billion, according to Invensys.
Baan will remain at its current headquarters and will be run by Laurens Van der Tang, who is currently executive vice president of research and development at Baan, a vendor of enterprise resource planning software and other applications.
But Invensys said it plans to implement a "rigorous restructuring and cost management program" at Baan in an attempt to end the losses there.
Details of the planned restructuring weren't available last week, but Invensys said it hopes to reduce Baan's costs by $60 million to $120 million per quarter by year's end. Even so, Baan isn't likely to return to break-even financial performance until the middle of next year at the earliest, according to Invensys, which expects to incur restructuring charges of $400 million during the next 18 months as a result of the acquisition.
Invensys said it has already received commitments to tender shares from Baan's management and supervisory boards and from several institutional investors, totalling 11.1 per cent of Baan's outstanding stock.
Rumours about Baan's future flared up earlier in the week and reached fever pitch by week's end, when trading of its stock was halted in anticipation of a buyout deal. Baan has been in nearly constant turmoil since mid-1998, after going on an acquisition binge of its own over a three-year period. Its last permanent CEO, Mary Coleman, left in January, when the company also axed 4 per cent of its workforce.