Baan agrees to $708m acquisition by UK vendor

Baan agrees to $708m acquisition by UK vendor

A would-be saviour for troubled Baan NV has finally appeared: Invensys PLC, a London-based maker of industrial automation and control products that has already bought two other applications vendors in the past two years.

The companies announced that Invensys plans to buy Netherlands-based Baan, a vendor of enterprise resource planning software and other applications, for 762 million euros ($708.7 million) in an all-cash deal. 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.

If the deal goes through, Baan would be folded into a new Invensys Software and Systems (ISS) division that Invensys also announced, 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. But Invensys said it plans to implement a "rigorous restructuring and cost management program" in an attempt to end the losses there.

Details of the planned restructuring weren't available this morning, but Invensys said it hopes to reduce Baan's costs by $60 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 already has 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 late last week and reached a fever pitch yesterday, 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.

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