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Beached Baan bows to buyer

So farewell then, Graham's Baan stories...

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Invensys has confirmed that it has made an agreed all-cash offer for Baan of 2.85 Euros share, which values Baan at 762 million Euros, 474, or $708 million. The offer is recommended by both boards. Yesterday, Baan closed in Amsterdam at 2.62 Euros, giving a less than nine per cent premium, which is certainly considerably less than expected.

It will result in US investors who held shares yesterday making a loss. Trading was suspended yesterday afternoon on Nasdaq at the request of the company, when they were up 54 per cent to $4.19, which will result in US shareholders having a loss of $1.09/share.

The acquisition is far from unexpected - a rumour had been circulating for several days, and there was heavy overnight briefing.

The cash will be on the table in three weeks, and is expected to be approved by the Baan unions and Works Councils. Vanenburg Group, the investment vehicle of Jan Baan the founder and former CEO and his brother Paul Baan, will also sell its 5.9 per cent holding. Invensys has agreements for acquiring 11.1 percent of the Baan shares. The offer is conditional on Invensys getting 95 per cent of Baan's shares.

Invensys, which reports its annual results today, was formed by the merger of BTR and Siebe last February, and is headquartered in London. For the FY ending March 1999, its turnover was 6.55 billion. There are 100,000 employees in four divisions: intelligent automation; industrial drive systems; power systems; and controls. The objective of the company is to be the global leader in the automation and controls industry.

Baan announced it was selling its Coda Group for $49.3 million to UK-based Science Systems in March, less than a year after it had acquired the company.

Invensys faces a tough job in restoring Baan to profitability. It is setting up a new Invensys Software and Systems Division, which will have a value of around $2 billion. This will be managed by Bruce Henderson, who has been chief executive of Intelligent Automation at Invensys. Laurens Van der Tang, currently EVP of research at Baan, will become president. By Q4, Baan's costs will be reduced by $60 to $120 million per quarter, as part of a "rigorous restructuring and cost management programme". Invensys says it will incur restructuring charges of $400 million over 18 months.

Invensys CEO Allen Yurko sees the deal as a significant step to Invensys becoming an integrated software and systems provider across the entire automation and controls value chain. For Baan's part, interim CEO Pierre Everaert thought it was "an excellent outcome for shareholders, customers and employees".

That may not be a universal sentiment, however. The shareholders will remember the day when Baan shares were at 49 Euros, and the company was the second software company in Europe, on the heels of SAP. Many customers do seem to be keeping their Baan software, but are not upgrading much and must have been chewing their nails for most of this year. As for the employees, with the cost reductions envisaged, there will inevitably be some terminations, although Invensys has said that it will continue with all Baan's products and that it is committed to a strong research and development programme.

The Baan name will continue to be used, but many will be blaming Jan Baan's management style for the demise of the company. ®

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